Why stimulus can’t fix our energy problems

Economists tell us that within the economy there is a lot of substitutability, and they are correct. However, there are a couple of not-so-minor details that they overlook:

  • There is no substitute for energy. It is possible to harness energy from another source, or to make a particular object run more efficiently, but the laws of physics prevent us from substituting something else for energy. Energy is required whenever physical changes are made, such as when an object is moved, or a material is heated, or electricity is produced.
  • Supplemental energy leverages human energy. The reason why the human population is as high as it is today is because pre-humans long ago started learning how to leverage their human energy (available from digesting food) with energy from other sources. Energy from burning biomass was first used over one million years ago. Other types of energy, such as harnessing the energy of animals and capturing wind energy with sails of boats, began to be used later. If we cut back on our total energy consumption in any material way, humans will lose their advantage over other species. Population will likely plummet because of epidemics and fighting over scarce resources.

Many people appear to believe that stimulus programs by governments and central banks can substitute for growth in energy consumption. Others are convinced that efficiency gains can substitute for growing energy consumption. My analysis indicates that workarounds, in the aggregate, don’t keep energy prices high enough for energy producers. Oil prices are at risk, but so are coal and natural gas prices. We end up with a different energy problem than most have expected: energy prices that remain too low for producers. Such a problem can have severe consequences.

Let’s look at a few of the issues involved:

[1] Despite all of the progress being made in reducing birth rates around the globe, the world’s population continues to grow, year after year.

Figure 1. 2019 World Population Estimates of the United Nations. Source: https://population.un.org/wpp/Download/Standard/Population/

Advanced economies in particular have been reducing birth rates for many years. But despite these lower birth rates, world population continues to rise because of the offsetting impact of increasing life expectancy. The UN estimates that in 2018, world population grew by 1.1%.

[2] This growing world population leads to a growing use of natural resources of every kind.

There are three reasons we might expect growing use of material resources:

(a) The growing world population in Figure 1 needs food, clothing, homes, schools, roads and other goods and services. All of these needs lead to the use of more resources of many different types.

(b) The world economy needs to work around the problems of an increasingly resource-constrained world. Deeper wells and more desalination are required to handle the water needs of a rising population. More intensive agriculture (with more irrigation, fertilization, and pest control) is needed to harvest more food from essentially the same number of arable acres. Metal ores are increasingly depleted, requiring more soil to be moved to extract the ore needed to maintain the use of metals and other minerals. All of these workarounds to accommodate a higher population relative to base resources are likely to add to the economy’s material resource requirements.

(c) Energy products themselves are also subject to limits. Greater energy use is required to extract, process, and transport energy products, leading to higher costs and lower net available quantities.

Somewhat offsetting these rising resource requirements is the inventiveness of humans and the resulting gradual improvements in technology over time.

What does actual resource use look like? UN data summarized by MaterialFlows.net shows that extraction of world material resources does indeed increase most years.

Figure 2. World total extraction of physical materials used by the world economy, calculated using weight in metric tons. Chart is by MaterialFlows.net. Amounts shown are based on the Global Material Flows Database of the UN International Resource Panel. Non-metallic minerals include many types of materials including sand, gravel and stone, as well as minerals such as salt, gypsum and lithium.

[3] The years during which the quantities of material resources cease to grow correspond almost precisely to recessionary years.

If we examine Figure 2, we see flat periods or periods of actual decline at the following points: 1974-75, 1980-1982, 1991, and 2008-2009. These points match up almost exactly with US recessionary periods since 1970:

Figure 3. Dates of US recessions since 1970, as graphed by the Federal Reserve of St. Louis.

The one recessionary period that is missed by the Figure 2 flat periods is the brief recession that occurred about 2001.

[4] World energy consumption (Figure 4) follows a very similar pattern to world resource extraction (Figure 2).

Figure 4. World Energy Consumption by fuel through 2018, based on 2019 BP Statistical Review of World Energy. Quantities are measured in energy equivalence. “Other Renew” includes a number of kinds of renewables, including wind, solar, geothermal, and sawdust burned to provide electricity. Biofuels such as ethanol are included in “Oil.”

Note that the flat periods are almost identical to the flat periods in the extraction of material resources in Figure 2. This is what we would expect, if it takes material resources to make goods and services, and the laws of physics require that energy consumption be used to enable the physical transformations required for these goods and services.

[5] The world economy seems to need an annual growth in world energy consumption of at least 2% per year, to stay away from recession.

There are really two parts to projecting how much energy consumption is needed:

  1. How much growth in energy consumption is required to keep up with growing population?
  2. How much growth in energy consumption is required to keep up with the other needs of a growing economy?

Regarding the first item, if the population growth rate continues at a rate similar to the recent past (or slightly lower), about 1% growth in energy consumption is needed to match population growth.

To estimate how much growth in energy supply is needed to keep up with the other needs of a growing economy, we can look at per capita historical relationships:

Figure 5. Three-year average growth rates of energy consumption and GDP. Energy consumption growth per capita uses amounts provided in BP 2019 Statistical Review of World Energy. World per capita GDP amounts are from the World Bank, using GDP on a 2010 US$ basis.

The average world per capita energy consumption growth rate in non-recessionary periods varies as follows:

  • All years: 1.5% per year
  • 1970 to present: 1.3% per year
  • 1983 to present: 1.0% per year

Let’s take 1.0% per year as the minimum growth in energy consumption per capita required to keep the economy functioning normally.

If we add this 1% to the 1% per year expected to support continued population growth, the total growth in energy consumption required to keep the economy growing normally is about 2% per year.

Actual reported GDP growth would be expected to be higher than 2%. This occurs because the red line (GDP) is higher than the blue line (energy consumption) on Figure 5. We might estimate the difference to be about 1%. Adding this 1% to the 2% above, total reported world GDP would be expected to be about 3% in a non-recessionary environment.

There are several reasons why reported GDP might be higher than energy consumption growth in Figure 5:

  • A shift to more of a service economy, using less energy in proportion to GDP growth
  • Efficiency gains, based on technological changes
  • Possible intentional overstatement of reported GDP amounts by some countries to help their countries qualify for loans or to otherwise enhance their status
  • Intentional or unintentional understatement of inflation rates by reporting countries

[6] In the years subsequent to 2011, growth in world energy consumption has fallen behind the 2% per year growth rate required to avoid recession.

Figure 7 shows the extent to which energy consumption growth has fallen behind a target growth rate of 2% since 2011.

Figure 6. Indicated amounts to provide 2% annual growth in energy consumption, as well as actual increases in world energy consumption since 2011. Deficit is calculated as Actual minus Required at 2%. Historical amounts from BP 2019 Statistical Review of World Energy.

[7] The growth rates of oil, coal and nuclear have all slowed to below 2% per year since 2011. While the consumption of natural gas, hydroelectric and other renewables is still growing faster than 2% per year, their surplus growth is less than the deficit of oil, coal and nuclear.

Oil, coal, and nuclear are the types of energy whose growth has lagged below 2% since 2011.

Figure 7. Oil, coal, and nuclear growth rates have lagged behind the target 2% growth rate. Amounts based on data from BP’s 2019 Statistical Review of World Energy.

The situations behind these lagging growth rates vary:

  • Oil. The slowdown in world oil consumption began in 2005, when the price of oil spiked to the equivalent of $70 per barrel (in 2018$). The relatively higher cost of oil compared with other fuels since 2005 has encouraged conservation and the switching to other fuels.
  • Coal. China, especially, has experienced lagging coal production since 2012. Production costs have risen because of depleted mines and more distant sources, but coal prices have not risen to match these higher costs. Worldwide, coal has pollution issues, encouraging a switch to other fuels.
  • Nuclear. Growth has been low or negative since the Fukushima accident in 2011.

Figure 8 shows the types of world energy consumption that have been growing more rapidly than 2% per year since 2011.

Figure 8. Natural gas, hydroelectric, and other renewables (including wind and solar) have been growing more rapidly than 2% since 2011. Amounts based on data from BP’s 2019 Statistical Review of World Energy.

While these types of energy produce some surplus relative to an overall 2% growth rate, their total quantity is not high enough to offset the significant deficit generated by oil, coal, and nuclear.

Also, it is not certain how long the high growth rates for natural gas, hydroelectric, and other renewables can persist. The growth in natural gas may slow because transport costs are high, and consumers are not willing/able to pay for the high delivered cost of natural gas, when distant sources are used. Hydroelectric encounters limits because most of the good sites for dams are already taken. Other renewables also encounter limits, partly because many of the best sites are already taken, and partly because batteries are needed for wind and solar, and there is a limit to how fast battery makers can expand production.

Putting the two groupings together, we obtain the same deficit found in Figure 6.

Figure 9. Comparison of extra energy over targeted 2% growth from natural gas, hydroelectric and other renewables with energy growth deficit from oil, coal and nuclear combined. Amounts based on data from BP’s 2019 Statistical Review of World Energy.

Based on the above discussion, it seems likely that energy consumption growth will tend to lag behind 2% per year for the foreseeable future.

[8] The economy needs to produce its own “demand” for energy products, in order to keep prices high enough for producers. When energy consumption growth is below 2% per year, the danger is that energy prices will fall below the level needed by energy producers.

Workers play a double role in the economy:

  • They earn wages, based on their jobs, and
  • They are the purchasers of goods and services.

In fact, low-wage workers (the workers that I sometimes call “non-elite workers”) are especially important, because of their large numbers and their role in buying many items that use significant amounts of energy. If these workers aren’t earning enough, they tend to cut back on their discretionary buying of homes, cars, air conditioners, and even meat. All of these require considerable energy in their production and in their use.

High-wage workers tend to spend their money differently. Most of them have already purchased as many homes and vehicles as they can use. They tend to spend their extra money differently–on services such as private education for their children, or on investments such as shares of stock.

An economy can be configured with “increased complexity” in order to save energy consumption and costs. Such increased complexity can be expected to include larger companies, more specialization and more globalization. Such increased complexity is especially likely if energy prices rise, increasing the benefit of substitution away from the energy products. Increased complexity is also likely if stimulus programs provide inexpensive funds that can be used to buy out other firms and for the purchase of new equipment to replace workers.

The catch is that increased complexity tends to reduce demand for energy products because the new way the economy is configured tends to increase wage disparity. An increasing share of workers are replaced by machines or find themselves needing to compete with workers in low-wage countries, lowering their wages. These lower wages tend to lower the demand of non-elite workers.

If there is no increase in complexity, then the wages of non-elite workers can stay high. The use of growing energy supplies can lead to the use of more and better machines to help non-elite workers, and the benefit of those machines can flow back to non-elite workers in the form of higher wages, reflecting “higher worker productivity.” With the benefit of higher wages, non-elite workers can buy the energy-consuming items that they prefer. Demand stays high for finished goods and services. Indirectly, it also stays high for commodities used in the process of making these finished goods and services. Thus, prices of energy products can be as high as needed, so as to encourage production.

In fact, if we look at average annual inflation-adjusted oil prices, we find that 2011 (the base year in Sections [6] and [7]) had the single highest average price for oil.1 This is what we would expect, if energy consumption growth had been adequate immediately preceding 2011.

Figure 10. Historical inflation-adjusted Brent-equivalent oil prices based on data from 2019 BP Statistical Review of World Energy.

If we think about the situation, it is not surprising that the peak in average annual oil prices took place in 2011, and the decline in oil prices has coincided with the growing net deficit shown in Figures 6 and 9. There was really a double loss of demand, as growth in energy use slowed (reducing direct demand for energy products) and as complexity increased (shifting more of the demand to high-wage earners and away from the non-elite workers).

What is even more surprising is the fact that the prices of fuels in general tend to follow a similar pattern (Figure 11). This strongly suggests that demand is an important part of price setting for energy products of all kinds. People cannot buy more goods and services (made and transported with energy products) than they can afford over the long term.

Figure 11. Comparison of changes in oil prices with changes in other energy prices, based on time series of historical energy prices shown in BP’s 2019 Statistical Review of World Energy. The prices in this chart are not inflation-adjusted.

If a person looks at all of these charts (deficits in Figures 6 and 9 and oil and energy prices in general from Figures 10 and 11) for the period 2011 onward, there is a very distinct pattern. There is at first a slow slide down, then a fast slide down, followed (at the end) by an uptick. This is what we should expect, if low energy growth is leading to low prices for energy products in general.

[9] There are two different ways that oil and other energy prices can damage the economy: (a) by rising too high for consumers or (b) by falling too low for producers to have funds for reinvestment, taxes and other needs. The danger at this point is from (b), energy prices falling too low for producers.

Many people believe that the only energy problem that an economy can have is prices that are too high for consumers. In fact, energy prices seemed to be very high in the lead-ups to the 1974-1975 recession, the 1980-1982 recession, and the 2008-2009 recession. Figure 5 shows that the worldwide growth in energy consumption was very high in the lead-up to all three of these recessions. In the two earlier time periods, the US, Europe, and the Soviet Union were all growing their economies, leading to high demand. Preceding the 2008-2009 Great Recession, China was growing its economy very rapidly at the same time the US was providing low interest rates for home purchases, some of them to subprime borrowers. Thus, demand was very high at that time.

The 1974-75 recession and the 1980-1982 recession were fixed by raising interest rates. The world economy was overheating with all of the increased leveraging of human energy with energy products. Higher short-term interest rates helped bring growth in energy prices (as well as food prices, which are very dependent on energy consumption) down to a more manageable level.

Figure 12. Three-month and ten-year interest rates through May 2019, in chart by Federal Reserve of St. Louis.

There was really a two-way interest rate fix related to the Great Recession of 2008-2009. First, when oil and other energy prices started to spike, the US Federal Reserve raised short term interest rates in the mid 2000s. This, by itself, was almost enough to cause recession. When recession started to set in, short-term interest rates were brought back down. Also, in late 2008, when oil prices were very low, the US began using Quantitative Easing to bring longer-term interest rates down, and the price of oil back up.

Figure 13. Monthly Brent oil prices with dates of US beginning and ending Quantitative Easing.

There is one recession that seems to have been the result of low oil prices, perhaps combined with other factors. That is the recession that was associated with the collapse of the central government of the Soviet Union in 1991.

[10] The recession that comes closest to the situation we seem to be heading into is the one that affected the world economy in 1991 and shortly thereafter.

If we look at Figures 2 and 5, we can see that the recession that occurred in 1991 had a moderately severe effect on the world economy. Looking back at what happened, this situation occurred when the central government of the Soviet Union collapsed after 10 years of low oil prices (1982-1991). With these low prices, the Soviet Union had not been earning enough to reinvest in new oil fields. Also, communism had proven to be a fairly inefficient method of operating the economy. The world’s self-organizing economy produced a situation in which the central government of the Soviet Union collapsed. The effect on resource consumption was very severe for the countries most involved with this collapse.

Figure 14. Total extraction of physical materials Eastern Europe, Caucasus and Central Asia, in chart by MaterialFlows.net. Amounts shown are based on the Global Material Flows Database of the UN International Resource Panel.

World oil prices have been falling too low, at least since 2012. The biggest decreases in prices have come since 2014. With energy prices already very low compared to what producers need, there is a need right now for some type of stimulus. With interest rates as low as they are today, it will be very difficult to lower interest rates much further.

Also, as we have seen, debt-related stimulus is not very effective at raising energy prices unless it actually raises energy consumption. What works much better is energy supply that is cheap and abundant enough that supply can be ramped up at a rate well in excess of 2% per year, to help support the growth of the economy. Suitable energy supply should be inexpensive enough to produce that it can be taxed heavily, in order to help support the rest of the economy.

Unfortunately, we cannot just walk away from economic growth because we have an economy that needs to continue to expand. One part of this need is related to the world’s population, which continues to grow. Another part of this need relates to the large amount of debt that needs to be repaid with interest. We know from recent history (as well as common sense) that when economic growth slows too much, repayment of debt with interest becomes a problem, especially for the most vulnerable borrowers. Economic growth is also needed if businesses are to receive the benefit of economies of scale. Ultimately, an expanding economy can be expected to benefit the price of a company’s stock.

Observations and Conclusions

Perhaps the best way of summing up how my model of the world economy differs from other ones is to compare it to other popular models.

The Peak Oil model says that our energy problem will be an oil supply problem. Some people believe that oil demand will rise endlessly, allowing prices to rise in a pattern following the ever-rising cost of extraction. In the view of Peak Oilers, a particular point of interest is the date when the supply of oil “peaks” and starts to decline. In the view of many, the price of oil will start to skyrocket at that point because of inadequate supply.

To their credit, Peak Oilers did understand that there was an energy bottleneck ahead, but they didn’t understand how it would work. While oil supply is an important issue, and in fact, the first issue that starts affecting the economy, total energy supply is an even more important issue. The turning point that is important is when energy consumption stops growing rapidly enough–that is, greater than the 2% per year needed to support adequate economic growth.

The growth in oil consumption first fell below the 2% level in 2005, which is the year that some observers have claimed that “conventional” (that is, free flowing, low-cost) oil production peaked. If we look at all types of energy consumption combined, growth fell below the critical 2% level in 2012. Both of these issues have made the world economy more vulnerable to recession. We experienced a recession based on prices that were too high for consumers in 2008-2009. It appears that the next bottleneck may be caused by energy prices that are too low for producers.

Recessions that are based on prices that are too low for the producer are the more severe type. For one thing, such recessions cannot be fixed by a simple interest rate fix. For another, the timing is unpredictable because a problem with low prices for the producer can linger for quite a few years before it actually leads to a major collapse. In fact, individual countries affected by low energy prices, such as Venezuela, can collapse before the overall system collapses.

While the Peak Oil model got some things right and some things wrong, the models used by most conventional economists, including those included in the various IPCC reports, are far more deficient. They assume that energy resources that seem to be in the ground can actually be extracted. They see no limitations caused by prices that are too high for consumers or too low for producers. They do not realize that affordable energy prices can actually fall over time, as the economy weakens.

Conventional economists assume that it is possible for politicians to direct the economy along lines that they prefer, even if doing so contradicts the laws of physics. In particular, they assume that the economy can be made to operate with much less energy consumption than is used today. They assume that we collectively can decide to move away from coal consumption, without having another fuel available that can adequately replace coal in quantity and uses.

History shows that the collapse of economies is very common. Collectively, we have closed our eyes to this possibility ever happening to the world economy in the modern era. If the issue with collapsing demand causing ever-lower energy prices is as severe as my analysis indicates, perhaps we should be examining this scenario more closely.


[1] There was a higher spike in oil prices in 2008, but averaged over the whole year, the 2008 price was lower than the continued high prices of 2011.

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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880 Responses to Why stimulus can’t fix our energy problems

  1. Rodster says:

    JMG, recently posted an article called “The Long View”. He says we probably have another couple of centuries until we are back in the Dark Ages. I gotta disagree with the couple of centuries and the Dark Ages. There’s a little problem called 450 NPP around the world that need constant attention along with the nuclear waste they produce i.e. spent fuel rods.

    “That’s the logic of the Long Descent: the slow, ragged, unevenly paced, but inexorable process by which a civilization that’s overshot its resource base winds up in history’s compost bin. The Western world has been on that trajectory now for just over a century, and probably has another couple of centuries to go before things bottom out in a deindustrial dark age. Over the months ahead, with the usual interruptions, I plan on surveying what’s happened along each of the trajectories that are dragging us down. Two weeks from now we’ll talk about the first of those: the imminent return of peak oil.”

    • Dan says:

      Let me stop right where it says the immenient return of peak oil like it is coming. On an EROEI basis I think we are there and have been. This is the point of Gail’s article is that you can only stretch the band so far with financial hocus pocus. Exhibit A – The shale industry.

      • I recommend on the topic as additional or overview material reading Ted Patzek’s recent series of articles, incl. the comment section. There are several different plays taken on by the “shale industry” and the early ‘neo peakoil’ theorists (one of them Patzek himself) severely undershot these diverse resource as well as the vehicle (fraudulent debt issuance) to get it from the ground in the first place.. These alt plays are good to placate the public as well as most experts at least till mid 2020s.. while OPEC+ is curbing the output, and also the factor of looming recession (possibly next round of GFC), so supply side constrain is not momentarily a problem. Simply put, all it takes -much more- time than previously speculated – (guess) estimated..

    • doomphd says:

      two moron centuries before collapse? i think he’s off by 180-190 years, or more.

      there may not even be any megafauna left on this planet in two more centuries, given the warming trends. maybe jellyfish and algae in the warm oceans.

      • Tim Groves says:

        There’s megafauna and then there’s megafauna.

        Maybe in another two centuries the world will be overrun with Brontosauruses reconstituted by scientists in white coats. Apparently they did fine for millions of years during the Jurassic Period when there was no ice at the poles and five times as much car-bon-di-oxide in the air than now.

        • GBV says:


          The brontosaurus isn’t likely to return unless gravity on Earth changes first…


          • Tim Groves says:

            Great video, GBV. Thinking about this will take my mind off of all the world’s current problems. It’s a real conundrum.

            What are the possibilities. Did these 180-ton animals live in shallow water and swamps? And did those huge flying dinosaurs live in a much thicker atmosphere?
            Did they have bones made of rebar and high-tech plumbing?
            Or did they all live under 1/3rd of current earth gravity?

            And how does this fit in with the expanding earth theory? Could the planet be being pumped up from the accretion of matter being brought into existence in the core, or raining down from space?

            Or is gravity everywhere increasing as a consequence of some other process going on in the Universe.

            It’s enough to keep a paleontologist up all night.

            • GBV says:

              At least it got you thinking anyway!

              “Settled science” really isn’t all that settled, and I wish more people would wake up to the fact that we really don’t know what we think we know. But that’s probably a pipe dream; I suspect that most people don’t like living with uncertainty tainting their belief systems…


    • I read JMG’s post. He got one part correct:

      We predicted instead that demand destruction and an assortment of temporary gimmicks would keep things rolling on, that measures of quality of life would continue to slide downhill, that politics and society would become increasingly fractured and irrational as people frantically tried to pretend that nothing was wrong, and that the prolonged and ragged process of decline I’ve called the Long Descent would continue to pick up speed.

      What he got wrong was the long-term direction of oil and other energy prices. He says,

      No, what will happen is that energy prices will spike, people will panic, economies will lurch and shudder and go through troubled times. Then another round of frantic jerry-rigging will find some liquid fuel source even dirtier and more costly than shale oil and another round of demand destruction will push more people into poverty, so that the charade can keep going. The price of fuel will never go down to what it was before the spike, energy costs will become an even greater drain on economic activity, the global financial system will be twisted into ever more baroque shapes to preserve the fiction of a free market, and more of what used to count as a normal lifestyle will become inaccessible to more people.

      I think he also misses the role of debt, and the need to repay debt with interest. Also, the world’s ever-rising population, who expect to be fed.

      But the falling energy prices, by themselves, doom the system.

      • GBV says:


        Going to modify JMG’s quoted text to see if I can’t make it “more correct”. Let me know how I do!

        (going to try to italicize & bold this… it’s my first time, so hopefully it works!)

        No, what will happen is that energy AFFORDABILITY will PLUMMET, people will panic, economies will lurch and shudder and go through troubled times. Then another round of frantic jerry-rigging will find some liquid fuel source even dirtier and more costly than shale oil and another round of demand destruction will push more people into poverty, so that the charade can keep going. The AFFORDABILITY of fuel will never go down to what it was before the spike, energy costs will become an even greater drain on economic activity, the global financial system will be twisted into ever more baroque shapes to preserve the fiction of a free market, and more of what used to count as a normal lifestyle will become inaccessible to more people.


  2. Interguru says:

    Forget peak oil. We are at peak water. Unlike oil, which in theory can be substituted for (windmills anyone?), there is no substitute for water. Global climate change threatens what we already have. Aquifers are being pumped dry. Desalinization is energy intensive. only useful in coastal areas and too expensive for agriculture. Already, as I write this, two cities, Capetown South Africa and Chennai India are out of water and many more are headed there.

    • Harry McGibbs says:

      Cape Town’s drama is over for now. Its reservoirs are back up near 60%, although there are still some water restrictions in place.

      Chennai is still in trouble though and it doesn’t tend to get much rain until October or even November when it benefits from the Retreating Monsoon. The mathematics of India’s overall water situation are dire – it has 17% of the world’s population but only 4% of the world’s water share.

      Sao Paolo in Brazil ran dry to the point where water had to be trucked in in 2014, I recall. You would imagine that sooner or later a large city is going to be rendered totally non-viable due to water shortages.

    • I agree that water is a very important limit. Water is used both by people themselves and by industry. Even desalination doesn’t get to exactly the kind of water that humans normally drink. Water needs minerals added to it, to be the kind of water our bodies are in need of, and this is an additional cost (as well as complexity). Pumping water uphill, long distances, can theoretically work, but it is an energy-intensive way of getting water to where a person wants it.

      • Harry McGibbs says:

        “Every day, 15,000 tankers ferry water from the countryside into the city. Everywhere you look, rows of bright neon plastic water pots are lined up along the lanes, waiting.

        “This is life in Chennai, a city of nearly five million on India’s southeastern coast.”

        • Tim Groves says:

          Population of Chnenai City (Madras)

          1791 300,000
          1871 367,552
          1881 405,848
          1891 452,518
          1901 509,346
          1911 518,660
          1921 526,911
          1931 647,232
          1941 777,481
          1951 1,416,056
          1961 1,729,141
          1971 2,469,449
          1981 3,266,034
          1991 3,841,396
          2001 4,343,645
          2011 7,088,000*
          2019 9,118,623

          *The city’s boundaries were expanded in 2011

          • Harry McGibbs says:

            Overpopulation certainly at the root of pretty much all of our problems, Tim.

          • Tim Groves says:

            Whoops! Excuse my spelling of Chennai.

            Harry, I agree with you there. That’s basically the point I was trying to make. What blows my mind is that this particular city has almost ten times as many people today as it did at the time of Indian independence.

            By the way, your island and the McGibbs Estate is still has plenty of space and—I hope— water for everyone, doesn’t it?

          • Fresh water is in some sense a renewable resource. But even if it is possible to get the same amount, year after year, it certainly doesn’t fix the “per capita” part of the problem.

  3. Yorchichan says:


    Remember this comment you made last time informing us that high fat low carb diets are bad? Sadly, I didn’t read it until after comments were already closed otherwise I’d have replied sooner.

    I hate to be the bearer of bad news, but it turns out that the Dr Greger whose youtube video you linked to is a lying vegan shill whose website “Nutrition Facts” used to be called “Vegan Research Institute”:


    Who’d have thought it? I’m sure you weren’t to know, but I would urge caution on the internet because it is full of vegan trolls spreading misinformation in order to advance their cause.

    To be clear, it’s an established scientific fact that carbohydrates (and to a lesser extent proteins) and not fats cause insulin to spike. Anyone who would pretend otherwise is, to quote the late, great Fast Eddy, a MORE-ON.

    • Yorchichan says:

      Here’s an actual cardiologist, whose only agenda is improving public health, talking about what really causes heart disease:

      I watched it a while ago, but I remember that as well as ascribing heart disease to refined carbohydrates, Dr Malhotra is damning of the food and pharmaceutical industries for putting profit before people’s health.

      • Dana says:

        I think veganism, or eating bugs is being pushed by elitist think tanks as a way to continue the financial ponzi, by being able to add even more “consumers” to an already woefully overpopulated planet. I am not going to eat bugs so that 3 more people can be added to the population. Sorry, not sorry.

        • djerek says:

          Low or zero meat diets have been used by elites in power to render the population of “plebs” weaker, dumber, shorter, more passive, etc. across time and space in human history, from feudal Europe to Mesoamerica to Rome (think bread & olive oil on the dole) to Hindu India (where it was made a religious rule that only the Kshatriya and Brahmin castes could eat meat, the latter only sacrificial meat).

          @Yorchichan notes with a few good sources, we now have a pretty good grasp on the science behind this but it is buried by misinformation pushed by elites and big ag/processed food industry shills.

    • Yorchichan says:


      You wrote:

      Actually, the more carbohydrates I eat, the better I feel and with the energy i easily sustain a 300 watt output for about 1h. Try that with your disease provoking diet high in fats.

      In fact, a ketogenic allows far greater endurance than a high carb diet. A person adjusted to burning fat is able to quickly draw on the large reserves of fat stored in the body; a person who is not a fat burner can only draw on the comparatively small glycogen reserves and “hits the wall” once the glycogen reserves run out:

      • Tim Groves says:

        Interesting, nay, fascinating stuff, Yorichan. Thanks!

        I’m currently pursuing a medium fat, medium simple carbohydrate, medium complex carbohydrate, medium protein diet with medium exercise, medium relaxation, a little coffee, a lot of tea, a little beer or wine, and generous amounts of several vitamins and minerals in the form of supplements. I also assiduously avoid imbibing tap water as chlorine and fluorine ions are poisonous, and heaven knows what else might be in there.

        I don’t know what the ideal diet is but I’m convinced that on the average, for every vitamin pill we take, we will avoid one pharmaceutical pill. Also, in my opinion, the less processed the food you eat, the healthier you are likely to be. I wouldn’t go quite as far as Scott and Helen Nearing—you don’t have to grow it all yourself and eat it all raw. After all, we are men, women or something in between, not rabbits or mountain goats.

        However, Scott made it to 100 and then died by fasting, while Helen reached 91 and died in a car accident—so there must have been something health promoting about their lifestyle. Anyone knocking veganism must take into account the fact that those two poster children lived far longer than the average, mean or median Americans of their generation.

        • Chrome Mags says:

          My wife had artery placque build up with assoc. angina, heart pain. A doctor wanted to put her under then decide himself if she needed stents to open the arteries, with her only finding out after coming to, but then anti-rejection drugs would have to be taken for the rest of her life. She has bad reactions to medications, so instead she opted for a Vegan diet. Here we are 6 years later, no heart pain, no stents, no medication.

          What doctors don’t tell you is what to eat. Whatever you eat its good to keep the # of saturated fats down. That’s what sticks to your artery walls, slows the flow, raises the blood pressure. Don’t let anyone tell you differently. I eat small amounts of chicken or fish, cheese but mostly eat salads and am now at an ideal weight. If you stick salads in between less healthy meals, the nutrients are so abundant that your appetite decreases and you naturally lose weight. I also feel a lot better. More alert, higher energy, better sleep and so on.

          Keep in mind the medical multi-millionaires don’t talk about diet because they make their money off of poor diets, so you have to stick up for yourself by making healthy choices. Oh, and the secret to eating salads is finding a low fat salad dressing you like. Try Red Shell Premium Japanese Miso Dressing, available only at Amazon. 5 grams of fat per serving which is low for salad dressing, but creamy and extremely tasty. Also, put avocado on salads. That’s a mono-unsaturated fat.

          • Yorchichan says:

            Most people will feel better on switching to a vegan diet, IF what they are switching from is a diet high in processed foods. However, in my opinion, and that of many more knowledgeable people, a vegan diet is a not good for long term health.

            The latest thinking on artery plaque is that it is caused by the oxidation of small dense LDL particles in the blood. Polyunsaturated vegetable oils are complicit in this oxidation process; saturated fats are not.

            • Most medical research indicates a J shaped curve in many areas, such as necessary BMI and input of various kinds of nutrients. In other words, too much is bad, but too little is as well.

              If a person has been on a diet high in processed foods, they almost certainly have been getting food with too much calorie density and too little in the way of the nutrients the body needs. Switching to a vegan diet will help balance this out. But over the long term, the vegan diet may very well prove inadequate, especially if the person is doing significant physical exercise. It is the J-curve problem. People with very low body weight tend to be most susceptible to secondary infections and to all kinds of things that go wrong. Unintentional weight loss in the elderly is a real problem. Studies everywhere seem to show that elderly with low BMIs have higher mortality rates. But a vegan diet (especially with minimally processed food items and not too much fat) can help get weight down in many people with high BMIs.

        • djerek says:

          You should really read Phinney & Volek’s book if you want to thoroughly understand this stuff, Dr. Tim. It’s called The Art & Science of Low Carbohydrate Living (there’s also one on The Art & Science of Low Carbohydrate Performance if you’re more interested in the athletic aspects).

          In contrast, veganism is based on pseudoscience that was originated with religious fundamentalist Seventh Day Adventists and funded by grain/cereal companies, which also have many links back to the Seventh Day Adventists (look up Dr. John Harvey Kellogg).

          • Tim Groves says:

            Thanks for the book recommendation. I have looked it up and the dietary advice seems very reasonable. The diet is primarily aimed at keeping us healthy with weight loss as a side benefit. Also, it’s an attractive and enjoyable diet once you get used to restricting the intake of simple carbs. I think I’ll get myself a copy of the book.

            But I couldn’t personally adopt either Phinney & Volek’s diet or a vegan diet as in either case, my wife would kill me. She’s the primary chef around here while I’m only the washer-upper. As it is, we argue over whether to eat our rice white or brown—she is addicted to white rice while the dog and I eat ours brown. I warn her about the dangers of foods with a high glycemic index but she reassures me that as long as the total percentage of such foods one consumes remains reasonable, there is no problem.

            As an example, she points out one of our neighbors’ thirty-something daughter who, following a previous breakdown ten years ago, has ballooned out to the point where she resembles a baby seal. This young lady consumes two liters of sugary juice and coca cola every day and loves eating those soft, insubstantial, sweet and creamy cakes that can be cut with a finger. “THAT’s what I call a high-carb diet,” she says. The young lady’s mother and her doctor have worried about her habit for years, but mum has lately come around to the conclusion that if her daughter is happy with the lifestyle, she’ll let her indulge, even though she knows it will shorten the daughter’s lifespan and probably make her an invalid into the bargain.

        • Yorchichan says:

          If you feel fine on your current diet, Tim, don’t change. When I was in Japan 30 years ago, I ate nothing but tempura and okonomiyaki for a month and, despite all the rice and noodles, I felt as good as I’ve ever felt. These days if I eat plants I get ill within a few days (high temperature, headache, elevated pulse, nausea). I don’t get better until about the third day after I stop eating them, so I have little choice but to avoid them.

          • Tim Groves says:

            That reaction sounds nasty, Yorichan. So you WON’T be adopting a vegan diet then? Do you have an allergy to certain plant foods, could it be something to do with your metabolism that will pass in time?

            At present I am being force-fed cucumbers, eggplants, tomatoes, onions, paprikas and fresh green beans with almost every meal. The veggie patch has been very productive this year and we are suffering the consequences. When I go to town I am always passing out bags of this morning’s harvest to friends and acquaintances and helping to depress prices in the local produce market. 🙂

            I think the first rule of healthy eating, in anyone’s book, should be “Stay away from junk.” And the second rule, to balance the first, should be “A little of what you fancy does no harm.” I think we all know what junk is. But in moderation, we can get away with an occasional ice cream, chocolate bar, or even something from the fast food store such as a double cheeseburger or a honey dip donut. Individually these are small sins, but they can add up if indulged in regularly.

            What I don’t subscribe to are commandments like, “Though shalt not eat flesh!” or “Though shalt avoid like the plague anything containing gluten!” Especially if somebody else has gone to a lot of trouble to prepare a meal for us, we should appreciate their efforts and accept whatever’s on the plate in the spirit of “for what we are about to receive may the [insert deity name here] make us truly grateful.” And if we really don’t like what’s been served by our hosts, we should eat it anyway and make a not to dine there again.

            I know, I’m out of the ark.

            • Yorchichan says:

              For everybody, it’s very difficult to decide exactly what foods they are allergic too, largely because of delayed reaction and the difficulty of isolating foodstuffs. Doctors are useless in diagnosing the culprits.

              Last summer I was on a carnivore diet, so only meat, fish cheese and eggs. Easy to imagine how boring this is. Buttered coffee for breakfast, an omelette with cheese and (e.g.) bacon for lunch, a piece of meat or a fish for dinner, day after day after day. So towards the end of September I gave it up and started eating a “super healthy” diet, containing lots of nuts, berries, fruit, vegetables, brown rice and tubers. I still ate animal products as well. This dietary switch occurred just before the start of freshers week, so for the next week I was ferrying drunken students to and from night clubs. At the end of freshers week I got sick with the symptoms I’ve described. I assumed I’d caught freshers flu off of the unhealthy dears, however, the symptoms persisted for months. I visited a doctor once, who prescribed a course of antibiotics (of course). The antibiotics had no effect (do they ever?). I know it beggars belief, but I never considered my symptoms might be due to diet until the middle of January, at which time I cut out the plant products again. Within three days I felt fine.

              At the start of this week I stupidly ate some carrots and various types of beans. My symptoms came back again far worse than before. Thursday night I thought I was going to die and since then I’ve been barely able to make it from bed to sofa. That’s why I have lots of time to post.

              Plants don’t want to be eaten (apart from their fruits). Because they can’t run away, their only defense is to create phytotoxins to damage any animals that eat them. Humans are not as well adapted to deal with these phytotoxins as many other omnivores, because our diet through most of the last million years of our evolution was meat based. It seems my own ability to deal with phytotoxins is poor even by human standards. This has not always been the case, so perhaps it was brought on by the long periods without eating plants last summer.

  4. Neil says:

    From 2007 to 2012, the UK’s peak electricity demand fell from 61.5 to 57.5GW. In 2019 peak demand was 34.6GW, a 43% drop since 2007! Demand is dropping at ~ 1GW/year.

    I don’t believe this is all due to more efficient light bulbs and better insulation, I think it indices how badly the economy has fallen the past decade

  5. Grant says:

    With Deutsche Bank dumping 18k employees worldwide and seemingly being investigated for other matters, the global car industry apparently losing sales everywhere and even the traditional (if such a word can be used for such a relatively recent technology) digital camera market reporting yet another year of significant unit decline in sales there seem to be few if any areas of consumer purchasing activity that are likely to be broadly positive. Better paid jobs disappearing (DB is merely and example of that – there are many others) would not suggest that the shortfall in car and camera sales – or any other primarily elective purchase outside the “needs” pyramid – are likely to pick up soon. Indeed perhaps the opposite.

    For example I saw a comment recent from a youngish person reporting that most of his friends and associates in their 20s had elected not to learn to drive and had no intention of doing so in the future. If one lives in a city and intended always to live in a City that probably makes sense as an individual but is very likely to shake up the automotive industry more than a little.

    Slovakia, it seems, has a huge reliance on Auto manufacturing and has the largest unit output per capita of population in the world. But it’s not looking like a strong basis for the future at the moment.


    Likewise people will see (at least for now) more value in their smart phones that come with a camera (or even cameras) than they would in having some extra lumps of technology to carry around. The results of their photographic efforts, for most, will be good enough or maybe even better than good enough.

    I would imagine that similar comments are likely to be valid for most business sectors – especially in the consumer area. For example what will the cheap trinkets plastic industry turn to once the use of plastics is either banned or finds its raw materials costs have increased to a level that makes the trinket unaffordable for the increasingly unemployed consumer market?

    It may be that much of whatever GDP growth has been achieved in the past 2 or 3 decades was based in short term more or less affordable (paid for by credit plans) development and introduction of energy consuming short-life products in higher tech technology industries. If that IS the case they could disappear (or see value reduced as they become established and development works slows) very quickly.

    What new demand might come along to replace the opportunities for consumer driven growth?

    Will it need to be low energy as a matter of course?

    • The big demand, in theory, could come to serve the ever-growing population of elderly.

      I read an article a while back about Japan’s efforts to create gadgets that would help elderly people continue to live in their homes longer. I don’t remember exactly what they were.

      There is one gadget that has been used by the nursing home industry to help reduce staffing needs and also reduce back injuries to staff working in the nursing home. The gadget lifts up people who are physically too weak to stand up on their own, and transfers them between two close-by points. I think of a patient being in a chair, and being picked up by the device to be transferred to a near-by wheel chair. Then, somehow the patient needs to get to where he wants to go, and the device (assuming it can move as well), needs to be able to transfer the patient to his next sitting or lying position. Usually, there is an attendant moving the device from room to room, as well as pushing the wheel chair from room to room. But I suppose someone could figure out how to work around this issue.

      The question is: Is this a good use of the world’s limited resources?

  6. I think there is too much focus of peak oilers and those who criticize them on the global peak. But history shows that many different peaks have caused crises already in the past.

    The US peak in 1970 resulted in the Nixon shock (birth of petro-dollar and all its future problems) and allowed OPEC to impose an oil embargo after the Jom Kilppur war

    The Iran peak in 1975 under the Shah caused the Iranian revolution which impacts on the world to this very day

    The mid 80s peak in the West Siberian oil fields and the Chernobyl accident brought about the collapse of the East-block

    The North Sea peak in the early 2000s brought oil prices out of the $20 range

    The 2005 peak caused the US recession end 2007 and the oil price shock in 2008 (together with additional Chinese oil demand for the Olympic Games)

    The response to the 2008 shock was low interest rates and QE1-QE3, which financed the US shale oil boom.Without this the world would be in a deep oil crisis.

    I think the weak economy now is caused by the debt and asset bubble problem created with that quantitative easing.

    Barring a war in the Middle East, the next event will be a peak in US shale oil production. But both could come together.

    And yes, just like energy, CO2 emissions have only stagnated in recessions.

    • I agree that individual country peaks have been important for oil. Oil that is being extracted is important source of jobs and of tax revenue. If prices are high and extraction costs are low, the tax revenue can be very substantial. I consider that tax revenue to be in some sense a measure of the “surplus energy” that the oil gives back to the country. If oil production peaks, this tax revenue falls. It also falls if oil prices fall or if oil extraction costs rise, and the amount refiners are willing to pay for the oil does not rise correspondingly.

      The lower selling price of oil in many ways is like the peaking of oil supply. Producers are finding their tax revenues falling greatly, even if they still continue to pump oil. Very often, other fossil fuel and mineral prices drop at a similar time. If a country is also extracting these, its revenues from these sources are reduced as well. Then the country is truly badly off.

    • Volvo 740 says:

      CO2 emissions have been remarkably stable though. You’d struggle to identify recessions by looking at the CO2 trend.

      • Actually, CO2 emissions have not been very stable, if you look at BP data relating to CO2 emissions from burning fossil fuels.

        This is chart of the CO2 emissions as stated.

        These are the three year average growth rates.

        They are not very stable. They vary by more things than just recessions, so I agree that they are not a very good indicator of recession.

        I am not convinced that these calculated amounts tell us much of anything. For one thing, there are a whole lot of other sources of CO2 emissions besides burning fossil fuels. For example, all of the emissions associated with raising cows and other animals. Cutting down forests seems to add to emissions (even when it is done in the name of increasing the amount of renewables).

        Also, natural gas has multiple issues. It tends to leak methane emissions (another global warming gas) into the atmosphere, both from leaky pipelines and from long-distance transport of LNG by ship. The BP calculation makes natural gas “look better” than oil and coal, but it is not clear that it really is, as it is actually used.

  7. MG says:

    The desperate measures against the depopulation:

    Warsaw plans big income tax break for young Poles


    “Mateusz Morawiecki, prime minister, said the measure would improve opportunities for young people “so that they would match those available in the west”. He said that since Poland joined the EU in 2004 1.7m people had left the country for other countries in the bloc.”

    The point is that this measure is only for the employed, not for the self-employed young people. The inflexibility of the permanent employment vis-a-vis the ageing population is a big problem.

    • ssincoski says:

      That is a good point. I did not know about that. In other words it just seems like PR since more and more people are forced into self-employment. I have been working in Telecom software for the last 10 years in Poland and that is always the first question: do you have your own company (can you submit an invoice)? Companies don’t want to have to deal with benefits, insurance, etc. You are on your own.

      • Rodster says:

        I’m also self employed and have been for many years. It does have it’s +/- but overall the pluses at least for me far outweigh the minuses.

      • MG says:

        Yes, it looks like PR, the politicians SURELY KNOW that the budget will not be ruined by this PR campaign.

    • One source of confusion in looking at population is the extent to which people move around.

      For example, I notice that all of the following countries in Europe show rising population:
      I imagine a lot of the increase is immigration.

      • MG says:

        The point is that the amount of the countries that need immigration is rising. On the other hand, there is this sinking amount of the permanent jobs. It is the same story as with marriages: no permanent relationships.

        What will be the outcome?

        It is sure that the countries that have favourable climate are the winners. If there is a scarcity of energy, if there is a scarcity of food, the last thing that you can have for free is the mild climate.

      • Grant says:


        I think it is immigration (of one kind or another) plus new, young working age immigrants from some parts of the world being able to bring in their relatives (once fully accepted) and also adding to the population by their own breeding desires.

        In many cases (but not necessarily all) the the cultural background of these younger people is, historically, based on a higher birth rate, whether a lot or a little higher is debatable, than the pre-existing population. It may also be part of a younger breeding age trend – which in many western countries has tended towards starting a family (or what passes for a family in the current era) in one’s 30s or a little before rather one’s early 20s.

        Starting later effectively skips and entire generation every 3.5 to 4 generations.

        The rate of breeding can also have a significant effect on cultural influences across the entire population.in ways that seem to be non-linear.

        Whether future projections can fully allow for such influences (or the future moderation of such influences) is an interesting question that may need to be answered quite soon.

        • There are a huge number of countries where births outnumber deaths, leading to a situation where resources become very stretched unless part of the population moves out. It is possible to calculate the difference between expected births and deaths, using the latest UN data. This is the net average increase per year, over the 2015-2020 period, expected by the UN:

          Worldwide: 83 million

          Sub-Sahara Africa: 27.5 million, and increasing each year

          Northern Africa and Western Asia (Mostly oil producing countries): 8.8 million, steady

          India: 14.5 million, decreasing

          China: 6.8 million, decreasing

          Latin America and the Caribbean (Mexico southward): 6.5 million, decreasing

          Australia/New Zealand: Less than 200,000

          Japan: Net decrease of 373,000; amount of decrease in increasing

          Eastern Europe and Russia: Net population decrease of about 400,000

          Rest of Europe: Net population decrease of 49,000

          United States and Canada: 1.2 million increase based on births over deaths

          Rest of world (Parts of Asia and Oceana not listed separately such as Pakistan, Bangladesh, Viet Nam) 18.3 million population increase, fairly steady

          There seem to be lots of places in the world to get immigrants from.

    • I found this article from September 2018:

      Poverty still plaguing Philadelphia, poorest big city in the country

      Poor cities will have a disproportionate number of problems. If nothing else, it is difficult for them to raise enough tax dollars. Taxes sometimes come on income. Often they are property taxes.

      Boundaries make a big difference. In some parts of the world, a city includes all of its suburbs. In the United States, this is generally not is the case. High wage people with high -priced homes like to be in separate suburbs, leaving poor people to take care of themselves. A lot of “push” to move to high-priced suburbs has to do with the better schools and other services those suburbs have.

  8. This time it's different...NO says:

    Nice write-up and glad to have you back with us, Gail. Hope the trip went well and if you have a minute to recap just a bit.
    Seems we will pull all stops to keep the can rolling along….
    Got this to share, sing along…

    Seems we have some issues…

    Washington (AFP) – US President Donald Trump on Thursday accused China of backsliding on promises to increase purchases of American farm exports.
    The president’s latest salvo on Twitter comes the same week that US and Chinese trade officials had their first contact in months in an effort to revive negotiations that nearly collapsed in May.
    Trump and his Chinese counterpart Xi Jinping met last month on the sidelines of the Group of 20 summit in Japan, agreeing to cease further hostilities while the talks resumed.
    “Mexico is doing great at the Border, but China is letting us down in that they have not been buying the agricultural products from our great Farmers that they said they would,” Trump said Thursday on Twitter
    This will not help our predicament at all.

    • Harry McGibbs says:

      ““Chinese officials have been exercising a strikingly high degree of caution over trade negotiations with the US, appearing reluctant to rush into a new round of talks with US officials, given the latter’s lack of sincerity and continued aggressive approach toward China on multiple fronts…”


      • Harry McGibbs says:

        “Mexico’s economy is showing signs of a greater slowdown than anticipated, the Central Bank of Mexico (Banxico) said on Thursday… Banxico blamed the slowdown mainly on a dip in domestic consumption and “weak” investment, but added external factors were also in play.

        “One key uncertainty weighing down the economy is that the United States and Canada have yet to ratify the United States-Mexico-Canada Agreement…”


        • Harry McGibbs says:

          ““Britain has failed to make meaningful progress towards a free trade deal with the United States. Amid “chronic” staffing shortages and communication breakdowns in Whitehall.

          “Details of meetings spanning two years show how overstretched departments have been working “at cross purposes” as transatlantic talks have repeatedly stumbled over politically sensitive topics such as rules on health, farming and the finance industry.””


          • I found this link describing US trade with the UK. https://ustr.gov/countries-regions/europe-middle-east/europe/united-kingdom

            The US exports more to the UK than it imports. Exports totaled $141.1 billion while imports totaled $121.2 billion in 2018.

            Top export categories in 2018 were

            • services ($74.9 billion) financial services, travel, and intellectual property
            • aircraft ($12 billion)
            • precious metal and stone (gold) ($8.5 billion)
            • machinery ($6.7 billion)
            • mineral fuels ($6.3 billion) [mostly diesel, I expect]
            • electrical machinery ($4.5 billion)
            • agricultural products ($2.0 billion) wine & beer, tree nuts, prepared food, soybeans, live animals

            Top import categories in 2018 were

            • Services ($60.4 billion) travel, financial services, and transport services
            • vehicles ($11 billion)
            • machinery ($9.3 billion)
            • pharmaceuticals ($5.0 billion)
            • mineral fuels ($4.3 billion) [I expect gasoline]
            • agricultural items ($824 million) (snack foods, cheese, beer, red meat)
      • The article is expressing China’s view of the situation. Political motives are also mentioned.

  9. kesar0 says:

    “There are two different ways that oil and other energy prices can damage the economy: (a) by rising too high for consumers or (b) by falling too low for producers to have funds for reinvestment, taxes and other needs. The danger at this point is from (b), energy prices falling too low for producers.”
    This situation happened several times already. There is this quote from the highly recommended book to OFW audience:
    War, Power and Oil by Matthieu Auzanneau

    pages 336-337
    “The ex-minister of Saudi oil, long retired [it was in 2001] from his weighty responsibilities, told two journalists of the English weekly Observer: “I am 100% sure that Americans were behind the increase in the price of oil.” In the early 1974, according to Yamani, when the shah called for even higher price increases, the king of Saudi Arabia asked his oil minister to go to Tehran to probe the intentions of the Persian ruler: Was he not worried about the anger of their common American ally? When Yamani raised the question with the shah, the latter, according to the Saudi minister, responded: “Why are you against the augmentation of the price of oil? Is this not what they want? Ask Henry Kissinger, it is he who wants a higher price.” Yamani reaffirmed those remarks in 2010.)”

    Sheikh Yamani explained Kissinger’s motive to the Observer: “The oil companies were in real trouble at that time, they had borrowed a lot of money and they needed a high oil price to save them.

    • Thanks! It is interesting that Auzanneau reports that the oil companies had borrowed a lot of money (about 2001), and they needed a high oil price to save them.

      The 1998-2000 period was a terrible time for world oil prices (Figure 10). If you look at Figure 5 in the text of my post, GDP growth rises high above energy supply growth about this time. This is another period with slow energy growth and lagging oil prices, even with high reported world GDP growth.

      If you look at Figure 12, the US first raised short term interest rates a few years before 2001, effectively causing a brief recession. (It is hard, at this point to understand why rates were raised to cause this brief recession, however.) Then interest rates were suddenly decreased, and what later became the subprime bubble was started with very generous underwriting standards for new loans plus low interest rates.

      Looking at the charts, I wonder what Alan Greenspan had to do with all of this. I presume he was involved with the interest rate manipulations. I expect that Kissenger and Greenspan conferred about issues such as this.

      I can certainly believe that the oil companies were in real trouble at the time. The oil prices were too low for anyone to make money off of. They needed the major drop in interest rates and the sub-prime bubble to help pull oil prices up. Maybe I need to add another recession to my list of recessions in which interest rate manipulations were used to save the day.

      After China joined the World Trade Organization in December 2001, I expect the need for the additional stimulus for low interest rates and lots of new housing starts was not as needed, because of the stimulus that China’s growth added to the world economy.

    • MickN says:

      Gail gets an acknowledgement in the notes at the end of the book for her talented and steadfast work on affordability. I only looked at the note because I thought the passage read as very Tverbergian and i wondered if she would be mentioned.

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