Expect low oil prices in 2020; tendency toward recession

Energy Forecast for 2020

Overall, I expect that oil and other commodity prices will remain low in 2020. These low oil prices will adversely affect oil production and several other parts of the economy. As a result, a strong tendency toward recession can be expected. The extent of recessionary influences will vary from country to country. Financial factors, not discussed in these forecasts, are likely also to play a role.

The following are pieces of my energy forecast for 2020:

[1] Oil prices can be expected to remain generally low in 2020. There may be an occasional spike to $80 or $90 per barrel, but average prices in 2020 are likely to be at or below the 2019 level. 

Figure 1. Average annual inflation-adjusted Brent equivalent oil prices in 2018 US$. 2018 and prior are as shown in BP’s 2019 Statistical Review of World Energy. Value for 2019 estimated by author based on EIA Brent daily oil prices and 2% expected inflation.

Figure 2 shows in more detail how peaks in oil prices have been falling since 2008. While it doesn’t include early January 2020 oil prices, even these prices would be below the dotted line.

Figure 2. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

Oil prices can temporarily spike because of inadequate supply or fear of war. However, to keep oil prices up, there needs to be an increase in “demand” for finished goods and services made with commodities. Workers need to be able to afford to purchase more goods such as new homes, cars, and cell phones. Governments need to be able to afford to purchase new goods such as paved roads and school buildings.

At this point, the world economy is struggling with a lack of affordability in finished goods and services. This lack of affordability is what causes oil and other commodity prices to tend to fall, rather than to rise. Lack of affordability comes when too many would-be buyers have low wages or no income at all. Wage disparity tends to rise with globalization. It also tends to rise with increased specialization. A few highly trained workers earn high wages, but many others are left with low wages or no job at all.

It is the fact that we do not have a way of making the affordability of finished goods rise that leads me to believe that oil prices will remain low. Raising minimum wages tends to encourage more mechanization of processes and thus tends to lower total employment. Interest rates cannot be brought much lower, nor can the terms of loans be extended much longer. If such changes were available, they would enhance affordability and thus help prevent low commodity prices and recession.

[2] World oil production seems likely to fall by 1% or more in 2020 because of low oil prices.

Quarterly oil production data of the US Energy Information Administration shows the following pattern:

Figure 3. Quarterly World Crude Oil and Natural Gas Liquids production, based on EIA international data through September 2019. This is a fairly broad definition of oil. It does not include biofuels because their production tends to be seasonal.

The highest single quarter of world oil production was the fourth quarter of 2018. Oil production has been falling since this peak quarter.

To examine what is happening, the production shown in Figure 3 can be divided into that by the United States, OPEC, and “All Other.”

Figure 4. Quarterly world crude oil and natural gas liquids production by part of the world, based on international data of the US Energy Information Agency through September 30, 2019.

Figure 4 shows that the production of All Other seems to be steady to slightly rising, more or less regardless of oil prices.

OPEC’s oil production bobs up and down. In general, its production is lower when oil prices are low, and higher when oil prices are high. (This shouldn’t be a surprise.) Recently, its production has been lower in response to low prices. Effective January 1, 2020, OPEC plans to reduce its production by another 500,000 barrels per day.

Figure 4 shows that oil production of the United States rose in response to high prices in the 2010 to 2013 period. It dipped in response to low oil prices in 2015 and 2016. When oil prices rose in 2017 and 2018, its production again rose. Production in 2019 seems to have risen less rapidly. Recent monthly and weekly EIA data confirm the flatter US oil production growth pattern in 2019.

Putting the pieces together, I estimate that world oil production (including natural gas liquids) for 2019 will be about 0.5% lower than that of 2018. Since world population is rising by about 1.1% per year, per capita oil production is falling faster, about 1.6% per year.

A self-organizing networked economy seems to distribute oil shortages through lack of affordability. Thus, for example, they might be expected to affect the economy through lower auto sales and through less international trade related to automobile production. International trade, of course, requires the use of oil, since ships and airplanes use oil products for fuel.

If prices stay low in 2020, both the oil production of the United States and OPEC will likely be adversely affected, bringing 2020 oil production down even further. I would expect that even without a major recession, world oil supply might be expected to fall by 1% in 2020, relative to 2019. If a major recession occurs, oil prices could fall further (perhaps to $30 per barrel), and oil production would likely fall lower. Laid off workers don’t need to drive to work!

[3] In theory, the 2019 and 2020 decreases in world oil production might be the beginning of “world peak oil.” 

If oil prices cannot be brought back up again after 2020, world oil production is likely to drop precipitously. Even the “All Other” group in Figure 4 would be likely to reduce their production, if there is no chance of making a profit.

The big question is whether the affordability of finished goods and services can be raised in the future. Such an increase would tend to raise the price of all commodities, including oil.

[4] The implosion of the recycling business is part of what is causing today’s low oil prices. The effects of the recycling implosion can be expected to continue into 2020.

With the rise in oil prices in the 2002-2008 period, there came the opportunity for a new growth industry: recycling. Unfortunately, as oil prices started to fall from their lofty heights, the business model behind recycling started to make less and less sense. Effective January 1, 2018, China stopped nearly all of its paper and plastic recycling. Other Asian nations, including India, have been following suit.

When recycling efforts were reduced, many people working in the recycling industry lost their jobs. By coincidence or not, auto purchases in China began to fall at exactly the same time as recycling stopped. Of course, when fewer automobiles are sold, demand for oil to make and operate automobiles tends to fall. This has been part of what is pushing world oil prices down.

Sending materials to Asia for recycling made economic sense when oil prices were high. Once prices dropped, China was faced with dismantling a fairly large, no longer economic, industry. Other countries have followed suit, and their automobile sales have also fallen.

Companies operating ships that transport manufactured goods to high income countries were adversely affected by the loss of recycling. When material for recycling was available, it could be used to fill otherwise-empty containers returning from high income countries. Fees for transporting materials to be recycled indirectly made the cost of shipping goods manufactured in China and India a little lower than they otherwise would be, if containers needed to be shipped back empty. All of these effects have helped reduce demand for oil. Indirectly, these effects tend to reduce oil prices.

The recycling industry has not yet shrunk back to the size that the economics would suggest is needed if oil prices remain low. There may be a few kinds of recycling that work (well sorted materials, recycled near where the materials have been gathered, for example), but it probably does not make sense to send separate trucks through neighborhoods to pick up poorly sorted materials. Some materials may better be burned or placed in landfills.

We are not yet through winding down the recycling effort. Even the recycling of materials such as aluminum cans is affected by oil prices. A March, 2019, WSJ article talks about a “glut of used cans” because some markets now prefer to use newly produced aluminum.

[5] The growth of the electric car industry can be expected to slow substantially in 2020, as it becomes increasingly apparent that oil prices are likely to stay low for a long period. 

Electric cars are expensive in two ways:

  1. In building the cars initially, and
  2. In building and maintaining all of the charging stations required if more than a few elite workers with charging facilities in their garages are to use the vehicles.

Once it is clear that oil prices cannot rise indefinitely, the need for all of the extra costs of electric vehicles becomes very iffy. In light of the changing view of the economics of the situation, China has discontinued its electric vehicle (EV) subsidies, as of January 1, 2020. Prior to the change, China was the world’s largest seller of electric vehicles. Year over year EV sales in China dropped by 45.6% in October 2019 and 45.7% in November 2019. The big drop in China’s EV sales has had a follow-on effect of sharply lower lithium prices.

In the US, Tesla has recently been the largest seller of EVs. The subsidy for the Tesla is disappearing in 2020 because it has sold over 200,000 vehicles. This is likely to adversely affect the growth of EV sales in the US in 2020.

The area of the world that seems to have a significant chance of a major uptick in EV sales in 2020 is Europe. This increase is possible because governments there are still giving sizable subsidies to buyers of such cars. If, in future years, these subsidies become too great a burden for European governments, EV sales are likely to lag there as well.

[6] Oceangoing ships are required to use fuels that cause less pollution as of January 2020. This change will have a positive environmental impact, but it will lead to additional costs which are impossible to pass on to buyers of shipping services. The net impact will be to push the world economy in the direction of recession.

If oceangoing ships use less polluting fuels, this will raise costs somewhere along the line. In the simplest cases, oceangoing vessels will purchase diesel fuel rather than lower, more polluting, grades of fuel. Refineries will need to charge more for the diesel fuel, if they are to cover the cost of removing sulfur and other pollutants.

The “catch” is that the buyers of finished goods and services cannot really afford more expensive finished goods. They cut back in their demand for automobiles, homes, cell phones and paved roads if oil prices rise. This reduction in demand is what pushes commodity prices, including oil prices, down.

Evidence that ship owners cannot really pass the higher refining costs along comes from the fact that the prices that shippers are able to charge for shipping seems to be falling, rather than rising. One January article says, “The Baltic Exchange’s main sea freight index touched its lowest level in eight months on Friday, weighed down by weak demand across all segments. . .The Index posted its biggest one day percentage drop since January 2014, in the previous session.”

So higher costs for shippers have been greeted by lower prices for the cost of shipping. It will partly be ship owners who suffer from the lower sales margin. They will operate fewer ships and lay off workers. But part of the problem will be passed on to the rest of the economy, pushing it toward recession and lower oil prices.

[7] Expect increasingly warlike behavior by governments in 2020, for the primary purpose of increasing oil prices.

Oil producers around the world need higher prices than recently have been available. This is why the US seems to be tapering its growth in shale oil production. Middle Eastern countries need higher oil prices in order to be able to collect enough taxes on oil revenue to provide jobs and to subsidize food purchases for citizens.

With the US, as well as Middle Eastern countries, wanting higher oil prices, it is no wonder that warlike behavior takes place. If, somehow, a country can get control of more oil, that is simply an added benefit.

[8] The year 2020 is likely to bring transmission line concerns to the wind and solar industries. In some areas, this will lead to cutbacks in added wind and solar.

A recent industry news item was titled Renewables ‘hit a wall’ in saturated Upper Midwest grid. Most of the material that is published regarding the cost of wind and solar omits the cost of new transmission lines to support wind and solar. In some cases, additional transmission lines are not really required for the first additions of wind and solar generation; it is only when more wind and solar are added that it becomes a problem. The linked article talks about projects being withdrawn until new transmission lines can be added in an area that includes Minnesota, Iowa, parts of the Dakotas and western Wisconsin. Adding transmission lines may take several years.

A related issue that has come up recently is the awareness that, at least in dry areas, transmission lines cause fires. Getting permission to site new transmission lines has been a longstanding problem. When the problem of fires is added to the list of concerns, delays in getting the approval of new transmission lines are likely to be longer, and the cost of new transmission lines is likely to rise higher.

The overlooked transmission line issue, once it is understood, is likely to reduce the interest in replacing other generation with wind and solar.

[9] Countries that are exporters of crude oil are likely to find themselves in increasingly dire financial straits in 2020, as oil prices stay low for longer. Rebellions may arise. Governments may even be overthrown.

Oil exporters often obtain the vast majority of their revenue from the taxation of receipts related to oil exports. If prices stay low in 2020, exporters will find their tax revenues inadequate to maintain current programs for the welfare of their people, such as programs providing jobs and food subsidies. Some of this lost revenue may be offset by increased borrowing. In many cases, programs will need to be cut back. Needless to say, cutbacks are likely to lead to unhappiness and rebellions by citizens.

The problem of rebellions and overthrown governments also can be expected to occur when exporters of other commodities find their prices too low. An example is Chile, an exporter of copper and lithium. Both of these products have recently suffered from low export prices. These low prices no doubt play a major part in the protests taking place in Chile. If more tax revenue from the sales of exports were available, there would be no difficulty in satisfying protesters’ demands related to poverty, inequality, and an overly high cost of living.

We can expect more of these kinds of rebellions and uprisings, the longer oil and other commodity prices stay too low for commodity producers.

Conclusion

I have not tried to tell the whole economic story for 2020; even the energy portion is concerning. A networked self-organizing system, such as the world economy, operates in ways that are far different from what simple “common sense” would suggest. Things that seem to be wonderful in the eyes of consumers, such as low oil prices and low commodity prices, may have dark sides that are recessionary in nature. Producers need high prices to produce commodities, but these high commodity prices lead to finished goods and services that are too expensive for many consumers to afford.

There probably cannot be a “one-size-fits-all” forecast for the world economy. Some parts of the world will likely fare better than others. It is possible that a collapse of one or more parts of the world economy will allow other parts to continue. Such a situation occurred in 1991, when the central government of the Soviet Union collapsed after an extended period of low oil prices.

It is easy to think that the future is entirely bleak, but we cannot entirely understand the workings of a self-organizing networked economy. The economy tends to have more redundancy than we would expect. Furthermore, things that seem to be terrible often do not turn out as badly as expected. Things that seem to be wonderful often do not turn out as favorably as expected. Thus, we really don’t know what the future holds. We need to keep watching the signs and adjust our views as more information unfolds.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,162 Responses to Expect low oil prices in 2020; tendency toward recession

    • Ninety-thousand is still less than 1% of the 11 million population of Wuhan.

      As I mentioned above, it is the death rate (3%, or something lower or higher) that is important. A lower percentage (with higher denominator) is better.

      • Chrome Mags says:

        Aren’t we forgetting the disruption this might cause to commerce? At 90,000 with coronavirus mostly in Wuhan, that city is shut down. If that’s the response wherever it spreads, that’s going to slow the world economy to a crawl with defaults on loans occurring as a result.

        • No kidding! I am trying to write a post related to the virus now.

          • How this is going to end up after-all?
            Here some broadly bracketed options to keep it simple:

            1/ Mostly kept to China and fizzling out at thousands to few k-dozens dead
            2/ More or less Spanish flue like impact, i.e. ~100M dead globally max
            3/ True pandemonium level in ~B causalities ala historic plague (~40% pop delete)

            You see, the economic and other specific outcomes are vastly different for each scenario. In case of #3 let me congratulate to survivors for their “newly acquired” nice vast acreage.. It won’t be easy but certainly very different with suddenly so few peoplez around.

            • I think it ends up being a communicable disease like measles that circulates for a long time, killing mostly the elderly, if they haven’t had the disease when they were young and healthy. Parents will take their children to parties for their children to catch the disease while they are still young and healthy.

              That is, if the economy doesn’t come down first, primarily from our reaction to the new disease. If the Wuhan Virus affects one-third of the population, as the Spanish Flu did, and 3% of those 1/3 die, the world population will decline by about 1%. This comes close to offsetting the natural increase in population for one year. Not a whole lot of impact on population.

          • Chrome Mags says:

            “I am trying to write a post related to the virus now.”

            Thanks, Gail, and looking forward to it. The official numbers so far are 106 out of 4515 infections per the following linked article:

            https://www.cnbc.com/2020/01/28/cdc-tells-travelers-to-avoid-china-in-expanded-travel-warning-as-coronavirus-spreads.html

            That works out to a fatality rate so far of .023 or 2.3%, X’s 8 billion = 184 million, but that’s if it goes global and there is no vaccine. But of course if it goes global the biggest problem will be its effect on the economy. Can’t have everybody hunkered down and have much in the way of monetary velocity.

            That’s a video by Chris Martenson on pandemic preparation. He seems quite alarmed by it and has a medical education. Get this, which is in his video, Hong Kong medical experts saying their probably are 10’s of thousands of cases. They estimate 44,000 cases with 25,000 likely to be sick, which is about 1/2 of what the whistleblower nurse was claiming. So maybe she was a bit high, but even if that number is correct, then this is a full blown pandemic, right, unless someone has information to counter that assertion.

            • Chrome Mags says:

              Or maybe I should say, it’s likely to become a pandemic, provided those numbers are correct and the other continents have already been seeded by those sick with the virus.

            • Chrome Mags says:

              Correction: Based on numbers above, likely to become a pandemic, due to people without symptoms spreading the virus on other continents.

              Meanwhile of course the big mainstream news is about the impeachment or the Grammy’s.

            • I don’t think it makes sense to use 100% of 8 billion as your base. The virus never hits everyone. The Spanish flu hit 30% of the total population. This was in two rounds, according to Chris Martenson.

              I think Chris is too alarmist on this one. There is really nothing we can do to fix the problem, apart from taking a few commonsense precautions when the virus hits our location. Also we need to make certain that we are in as good health as possible ourselves. It will spread, whether we like it or not.

  1. Yoshua says:

    The WTI USD 52 is right on the support line from the lows of 2016 and 2018 ( not shown on this graph).

    It will bounce from here. The end is not nigh.

    https://pbs.twimg.com/media/EPPpWILWAAY_HFC?format=png&name=large

    • The so far very correct theory of ever decreasing oil price (bust) might continue to hold for a while, especially during time of recession, depression, GFC_ver_xy etc. In the meantime temporary bursts up are welcomed as well, if you are shorting this stuff..
      Now where is the ultimate hell frozen over last barrier level? At $20-30 per barrel ?

      Or another possibility after decade+ the theory no longer fits reality, perhaps global govs over reach into everything economy would play into this eventually as well, setting up “permanent” rescue/snake/boundary floor for it. Sounds improbable now, but today’s reality of CBs owing share of every market (and %increasing to %%) was far fetched not long ago as well..

    • Davidinamonthorayearoradecade says:

      “It will bounce from here. The end is not nigh.”

      in normal circumstances, a bounce is probable…

      but the governmental/business/consumer reaction to the Wuhan Black Swan (not the effects of the virus itself) could cause huge economic disruptions…

      I predict WTI below 50 very soon…

      after that, the end is not nigh…

      if things calm down (some infected persons die, but most don’t) then the situation could normalize and oil prices could revert to the mean…

      it’s all quite good entertainment…

      • denial says:

        When the collapse happens the rich will be scapegoated much like the jews of Germany…..it is not their fault… but I for one may look the other way and many people I have talked to feel the same……anger has to go somewhere and the wealthy have been so blasé about everything for so long…..I hear the drumbeat growing louder and louder….most people on here don’t as they are “protected” and self assured that they will be fine

        • Well, that’s debatable, firstly what is “rich” – hard to quantify.

          The very top tier guys have either their own doom bunkers or direct access to such gov facilities. Some or most of them will be eventually toppled – replaced by their agile security detail “lieutenants” and various even more unscrupulous characters of their own entourage. That’s what both recent and ancient history is teaching us about such events and their inner dynamics. The ordinary agitated mob usually can’t reach this caste for quick revenge.

          So, who is the “next lesser rich” – more handily around, yes various pseudo upper middle classes with ostentatious cars, grotesque art or unpractical furniture, and other crap on display. Not much to loot there anyway.. it’s then more or less about resorting to vandalizing and having street corner fire fest thing..

        • If the rich get access to antiviral drugs and others do not, this will be a big problem, I expect.

    • I don’t think that this advice is really adequate to prevent the disease from spreading around the world. If might somewhat protect you, as an individual, but it will mostly delay when you will get it, because the disease will continue to circulate.

      I looked up the likelihood of catching a contagious illness like the flu was on a plane. According to the article,

      Researchers found that, for people seated within a seat or two to the side, or within one row forward or backward, the chances of catching a contagious virus were about 80%. Outside of that immediate radius from a sick passenger, however, the risk was much lower—only about 3%.

      Hertzberg says it’s a myth that recirculated air in planes make it more likely for viruses to spread through an entire cabin. “Most modern planes infuse fresh air at a very high rate,” she says, “actually more often than in your typical modern office building.”

      If you want to stop a very communicable disease, it is necessary to do more than reduce the chance you will catch it. You really need to stop all instances of it. Washing your hands and doing a few other things will help a bit to reduce the chance of catching diseases in general, but it doesn’t stop the disease.

  2. The Magus says:

    And, the moment we have all been waiting for, (drum roll please):

    The End of the World has Arrived

    China coronavirus: Hong Kong government asks civil servants to work from home after Lunar New Year holiday and urges private sector to enforce similar arrangements

    – Hong Kong government asks civil servants to work from home and urges private sector to follow suit

    – Bloomberg, PricewaterhouseCoopers, some law firms and some divisions of Hong Kong stock exchange have already rolled out similar plans

    https://www.scmp.com/news/hong-kong/politics/article/3047860/china-coronavirus-hong-kong-government-asks-civil-servants

    What do the HK authorities know about what’s really happening in China to precipitate this drastic action? Even during SARS they did NOT lock down the city like this.

    This will destroy airlines, hotels, restaurants, retail and everything else in Hong Kong. Nobody will move. And what about China?

    Will they shut their markets? What about global markets? Plunge protection teams warming up?

    This is the beginning of the end.

    • The Magus says:

      Scene from Alien? Nah – Wuhan:

      • Yoshua says:

        Bat flu or bioweapon?

        Do bats or aliens come out from the bodies?

        4500 confirmed cases
        30000 suspected cases

        • Dennis L. says:

          Bit of humor, bit of seriousness:
          Yoshua:
          Let us assume the following:
          1. This virus came out of some lab with someone or some group playing games with DNA or RNA for other than altruistic reasons.
          2. Let us assume there is a creator who has taken billions, and billions of years to get us this far.
          Is it fair to assume he/she/it will be more than a bit displeased with the group that tampered with the code of life?

          I have not followed up in other than a cursory manner, but it appears the genetic sequence is not random but has recurring patterns which imply some sort of design – we do not make anything in the modern, industrial world without some sort of plans, most very detailed, it is consistent with experience.

          Someone in this case would have been screwing around with the plans, that could be a very uncomfortable place to be when the metaphorical father returns home.

          Dennis L.

          • I think that the creator is in charge, even with respect to the person in the lab, making the virus for other than altruistic reasons. We don’t live in a random world. We don’t understand the whys. At best, we can figure out the hows.

    • This is crazy overreaction. We can’t stop the virus, but we can collapse the economy trying to stop it.

    • Harry McGibbs says:

      It’s worth adding that Hong Kong is already in recession thanks to the ongoing civil unrest there, so this lockdown will be particularly painful on top.

      I saw that rioters have already firebombed a housing complex in Hong Kong on learning it was about to be turned into a coronavirus quarantine zone in a convergence of the two crises.

      Perhaps ultimately fear of the virus will keep protesters at home – if we are searching hard for silver linings in all this!”

  3. CTG says:

    The resilience of supply chain will be severely tested in Hubei province. Remember that after a certain inflection point of supply chain interruption, it will never recover (see what happened to the near-catastrophic 2001/2002 strike in UK). If there are no food and supplies being sent in to the city before the inflection, anarchy will happen and any supplies will be hijacked by the people (11m in Wuhan). The death rate will be very significant (plus the potential of being infected by the virus or being killed by your nieghbour looking for food).

    I seriously doubt that China is looking at the supply chain issue (food to stores) or even electricity. If there is no one interested to work in the power plant of if half of the workers die, then who can run the power plant. If there is no power, then all hell will break loose almost immediately (water has to be pumped by electricity)

    • Curt Kurschus says:

      I would suggest that if you have considered the food and energy supply issues today, then the Chinese leaders have already done so a couple of days ago at least. Nobody is perfect, no leader is perfect, but China has a long history to learn from and the Communist Party aren’t going to allow themselves to be kicked out of office by a microscopic lifeform if there is anything at all that they can do that might make a difference.

    • In “sitting out” type of quarantine there is substantially decreased caloric input vs say concentration camp type of intense labor 24/365 output. Also China will be able up to some point mustering large “volunteer” cadre from the army and workers in other region etc. to haul supplies into these most troubled zones.. etc.

      However, we still don’t know the type and origins of this event, it could be:

      – genuine out-brake linked to gross unsanitary medieval practice going on even in today’s urban China
      – out-brake from leaking research lab (ehm biow. facility) in China
      – deliberate (crazy indiv) domestic out-brake / test from such facility
      – deliberate (gov depop) domestic out-brake / test from such facility
      – deliberate (crazy indiv) foreign made out-brake / test targeting China (using wet food markets as cover)
      – deliberate (gov depop) foreign made out-brake / test targeting China (using wet food markets as cover)
      ..
      .
      So many (+other) options, and therefor so many different outcomes.

      • Yoshua says:

        It would be the weirdest black swan in history.

        The global economy was taken down by someone ordering a bawl of bat soup.

        • Xabier says:

          Bowl of bat soup = butterflys wing…..

        • Not really. Epidemics have been part of collapses from the beginning of civilization. When a civilization has been weakened, it becomes vulnerable to collapses. If the population is generally young and well fed, the immune systems of its inhabitants generally work well. Also, a margin is built into crop yields, so that a plague like the locusts or the pig virus in China can be worked around. Once an economy tries to function too close to its upper limit, it becomes more vulnerable to the effects of epidemics.

          • Xabier says:

            I can see evidence of that in the old fields here: just before the 14th-century Black Death they had pushed the woodland back and expanded the area for crops to the maximum possible.

            From a population of about 60 in 1100, they reached over 350 by the time the great plague hit, taking out 30% or so of the villagers. No doubt many were malnourished and firewood was in short supply.

            For about a century or so before that you could say that they had really been pushing their luck…..

            Records seem to show that the mortality rate also went up among the royal family, but not as severely as among the common people.

            As well as being well-fed, they also had the option of moving ahead of the plague as it spread, not staying in one place for too long: Movement is Life!

      • The virus could just be very contagious. It doesn’t matter the source, and whether the intent was good or bad.

        From the articles I looked up recently and linked to earlier, Wuhan is a low-lying city at a place where another river enters the Yangtze River. It has a lot of trouble with flooding. Wuhan gets its water from the river, but it doesn’t publish water quality reports on a regular basis. I would be willing to bet that in rainy times, its waste processing equipment is overwhelmed by runoff water getting into the system as well. As a result, some of the time there is unprocessed human and animal waste getting into the water.

        Most people in China recognize that the water is not safe to drink without boiling it. But a lot of water is used, for example, to wash hands, without boiling. There could still be a problem with the virus spreading in the water, inadvertently, I would expect. I suppose that some people might have started to believe that boiling water is no longer necessary, as well.

    • I think you are right. Trying to cut off Hubei province in crazy. Even the plan to do so is crazy, because it will make people more fearful than necessary, especially if the bad effects are mainly on those who are elderly or in poor health to begin with.

  4. Harry McGibbs says:

    “World trade was poised to post its first annual decline since the financial crisis at the end of 2019, according to a closely watched gauge of activity… Businesses and market watchers don’t expect a full recovery anytime soon.”

    https://markets.businessinsider.com/news/stocks/world-trade-drop-first-time-since-financial-crisis-contraction-tariffs-2020-1-1028847156

  5. Harry McGibbs says:

    “The global rush for safer assets [partly driven by fuels re the novel coronavirus] has fueled a huge jump in the world’s stockpile of negative-yielding bonds, snapping months of decline in the value of subzero debt…

    “The resurgence is a potent reminder that the market distortions synonymous with loose monetary policies have not gone away.”

    https://www.pionline.com/markets/worlds-pile-negative-debt-surges-most-2016

  6. Yoshua says:

    A locust plague in the horn of Africa is threatening to cause famine.

    https://mobile.twitter.com/dwnews/status/1221989019229122561

    This year has started of on a dark note.

  7. Dennis L. says:

    A tangential reply to Xabier at 6:07 am.

    Any thoughts on this spreading to the homeless encampments in the US, particularly CA? Hygiene is an issue in those places. San Francisco comes to mind with its human excrement maps, steaming streets to clean them with workers in hazmat suits if I recall correctly.

    “cleanliness is next to godliness. Being clean is a sign of spiritual purity or goodness, as in Don’t forget to wash your ears—cleanliness is next to godliness. This phrase was first recorded in a sermon by John Wesley in 1778, but the idea is ancient, found in Babylonian and Hebrew religious tracts.” This quote is from Dictionary.com

    Many of these old myths, stories were probably learned the hard way, we might expect some or perhaps many of them to reappear is we move toward a “simpler” lifestyle.

    Dennis L.

    • Xabier says:

      The British ruling class only started to do something about public health, housing and, above all, the water supply in the early 19th century when the problem had become so severe that they themselves stood a high chance of catching cholera and ‘fevers of the poor’. The levels of filth we see in some parts of the US will surely come back and bite everyone, eventually. Let’s hope the politicians first of all…..

      • civilisation hangs on getting clean water in and waste water out

        we’ve got used to ‘flush and forget in no more than 4 generations at most

        I think we are about to be reminded of that law

        • Yep, sort of “3rd/4th turning” at play again, simply latest generation takes for granted temporarily existing reality nexus which is build upon legacy optimization leading to that very fragile end point of their present time. And I don’t mean it as blaming this or that generation, it’s more like a re-building nest on very old fragile tree in front of incoming windstorm..

          • i think we certainly take for granted things that have ”been” for our living memory

            ie, I have had electric light, plenty of food, warmth and fresh running water since I was born. I have to force myself not to take those for granted, but it’s difficult not to.

            If i wasn’t a diehard doomster, I guess I would assume they will go on forever

    • They are sort of related to the germ theory of disease before we understood the germ theory of disease. They are helpful ideas, even if the people promulgating them didn’t understand why. Jesus never said, “Cleanliness is next to godliness.” But people who learned helpful ideas wanted to pass them along, so cloaked them in religious sounding words.

      • all life threatening stuff was either the work of god or satan

        it wouldnt take long to figure out that if you wallowed in filth most of the time, you would likely contract some unspeakable disease, whereas if you kept reasonably clean you were less likely to

        so god obviously preferred clean believers (though they could be struck down for having unclean thoughts of course)

        satan wanted the other kind

        all perfectly logical

        • People liked stories to explain things for them.

          Now we have models without nearly enough dimensions that allow people to forecast the future, with about 0% accuracy. But these are viewed as scientific. I’ll take stories.

      • Xabier says:

        Washing carefully, wearing clean new clothes, etc, features in most magical rituals for summoning demons and spirits, together with not eating meat and abstaining from sex for 40 days or so – pretty squeaky clean in fact!

        ‘I met the Devil the other day; he was a charming, well-dressed man….’

        • The people in China seem not to wash very often. They tend to wear the same clothes over and over. I expect that this is the case all over the world with poor people.

          In fact, my own mother would not consider washing clothes after one wearing, unless there was visible soil on it. She grew up in the Depression era.

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