Energy Is the Economy; Shrinkage in Energy Supply Leads to Conflict

It takes energy to accomplish any of the activities that we associate with GDP. It takes energy to grow food: human energy, solar energy, and–in today’s world–the many types of energy used to build and power tractors, transport food to markets, and provide cooling for food that needs to be refrigerated. It takes energy to cook food and to smelt metals. It takes energy to heat and air condition offices and to power the internet. Without adequate energy, the world economy would come to a halt.

We are hitting energy limits right now. Energy per capita is already shrinking, and it seems likely to shrink further in the future. Reaching a limit produces a conflict problem similar to the one in the game musical chairs. This game begins with an equal number of players and chairs. At the start of each round, a chair is removed. The players must then compete for the remaining chairs, and the player who ends the round without a chair is eliminated. There is conflict among players as they fight to obtain one of the available chairs. The conflict within the energy system is somewhat hidden, but the result is similar.

A current conflict is, “How much energy can we spare to fight COVID-19?” It is obvious that expenditures on masks and vaccines have an impact on the economy. It is less obvious that a cutback in airline flights or in restaurant meals to fight COVID-19 indirectly leads to less energy being produced and consumed, worldwide. In total, the world becomes a poorer place. How is the pain of this reduction in energy consumption per capita to be shared? Is it fair that travel and restaurant workers are disproportionately affected? Worldwide, we are seeing a K shaped recovery: The rich get richer, while the poor get poorer.

A major issue is that while we can print money, we cannot print the energy supplies needed to run the economy. As energy supplies deplete, we will increasingly need to “choose our battles.” In the past, humans have been able to win many battles against nature. However, as energy per capita declines in the future, we will be able to win fewer and fewer of these battles against nature, such as our current battle with COVID-19. At some point, we may simply need to let the chips fall where they may. The world economy seems unable to accommodate 7.8 billion people, and we will have no choice but to face this issue.

In this post, I will explain some of the issues involved. At the end of the post, I include a video of a panel discussion that I was part of on the topic of “Energy Is the Economy.” The moderator of the panel discussion was Chris Martenson; the other panelists were Richard Heinberg and Art Berman.

[1] Energy consumption per person varies greatly by country.

Let’s start with a little background. There is huge variability in the quantity of energy consumed per person around the world. There is more than a 100-fold difference between the highest and lowest countries shown on Figure 1.

Figure 1. Energy consumption per capita in 2019 for a few sample countries based on data from BP’s 2020 Statistical Review of World Energy. Energy consumption includes fossil fuel energy, nuclear energy and renewable energy of many types. It omits energy products not traded through markets, such as locally gathered wood and animal dung. This omission tends to somewhat understate the energy consumption for countries such as India and those in Middle Africa.

I have shown only a few example countries, but we can see that cold countries tend to use a lot of energy, relative to their populations. Iceland, with an abundant supply of inexpensive hydroelectric and geothermal electricity, uses it to heat buildings, grow food in greenhouses, mine “bitcoins” and smelt aluminum. Norway and Canada have both oil and gas supplies, besides being producers of hydroelectricity. With abundant fuel supplies and a cold climate, both countries use a great deal of energy relative to the size of their population.

Saudi Arabia also has high energy consumption. It uses its abundant oil and gas supplies to provide air conditioning for its people. It also uses its energy products to enable the operation of businesses that provide jobs for its large population. In addition, Saudi Arabia uses taxes on the oil it produces to subsidize the purchase of imported food, which the country cannot grow locally. As with all oil and gas producers, some portion of the oil and gas produced is used in its own oil and gas operations.

In warm countries, such as those in Middle Africa and India, energy consumption tends to be very low. Most people in these countries walk for transportation or use very crowded public transport. Roads tend not to be paved. Electricity outages are frequent.

One of the few changes that can easily be made to reduce energy consumption is to move manufacturing to lower wage countries. Doing this reduces energy consumption (in the form of electricity) quite significantly. In fact, the rich nations have mostly done this, already.

Figure 2. World electricity generation by part of the world, based on data from BP’s 2020 Statistical Review of World Energy.

Trying to squeeze down energy consumption for the many countries around the world will be a huge challenge because energy is involved in every part of economies.

[2] Two hundred years of history shows that very slow growth in energy consumption per capita leads to bad outcomes.

Some readers will remember that I have pieced together data from different sources to put together a reasonable approximation to world energy consumption since 1820. In Figure 3, I have added a rough estimate of the expected drop in future energy consumption that might occur if either (1) the beginning of peak fossil fuels is occurring about now because of continued low fossil fuel prices, or (2) world economies choose to leave fossil fuels and move to renewables between now and 2050 in order to try to help the environment. Thus, Figure 3 shows my estimate of the pattern of total world energy consumption over the period of 1820 to 2050, at 10-year intervals.

Figure 3. Estimate by Gail Tverberg of World Energy Consumption from 1820 to 2050. Amounts for earliest years based on estimates in Vaclav Smil’s book Energy Transitions: History, Requirements and Prospects and BP’s 2020 Statistical Review of World Energy for the years 1965 to 2019. Energy consumption for 2020 is estimated to be 5% below that for 2019. Energy for years after 2020 is assumed to fall by 6.6% per year, so that the amount reaches a level similar to renewables only by 2050. Amounts shown include more use of local energy products (wood and animal dung) than BP includes.

The shape of this curve is far different from the one most forecasters expect because they assume that prices will eventually rise high enough so all of the fossil fuels that can be technically extracted will actually be extracted. I expect that oil and other fossil fuel prices will remain too low for producers, for reasons I discuss in Section [4], below. In fact, I have written about this issue in a peer reviewed academic article, published in the journal Energy.

Figure 4 shows this same information as Figure 3, divided by population. In making this chart, I assume that population drops only half as quickly as energy consumption falls after 2020. Total world population drops to 2.8 billion by 2050.

Figure 4. Amounts shown in Figure 3, divided by population estimates by Angus Maddison for earliest years and by 2019 United Nations population estimates for years to 2020. Future population estimated to be falling half as quickly as energy supply is falling.

In Figure 4, some parts of the curve are relatively flat, or even slightly falling, while others are rising rapidly. It turns out that rapidly rising times are much better for the economy than flat and falling times. Figure 5 shows the average annual percentage change in energy consumption per capita, for ten-year periods ending the date shown.

Figure 5. Average annual increase in energy consumption per capita for 10-year periods ended the dates shown, using the information in Figure 4.

If we look back at what happened in Figure 5, we find that when the 10-year growth in energy consumption is very low, or turns negative, conflict and bad outcomes are typical. For example:

  • Dip 1: 1861-1865 US Civil War
  • Dip 2: Several events
    • 1914-1918 World War I
    • 1918-1920 Spanish Flu Pandemic
    • 1929-1933 Great Depression
    • 1939-1945 World War II
  • Dip 3: 1991 Collapse of the Central Government of the Soviet Union
  • Dip 4: 2020 COVID-19 Pandemic and Recession

Per capita energy consumption was already growing very slowly before 2020 arrived. Energy consumption took a big step downward in 2020 (estimated at 5%) because of the shutdowns and the big cutback in air travel. One of the important things that energy consumption does is provide jobs. With severe cutbacks intended to contain COVID-19, many people in distant countries lost their jobs. Cutbacks of this magnitude quickly cause problems around the world.

For example, if people in rich countries rarely dress up to attend meetings of various kinds, there is much less of a market for dressy clothing. Many people in poor countries make their living manufacturing this type of clothing. With the loss of these sales, workers suddenly found themselves with much reduced income. Poor countries generally do not have good safety nets to provide food for those who are out of work. As a result, the diets of people subject to loss of income became inadequate, leading to greater vulnerability to disease. If the situation continues, some may even die of starvation.

[3] The pattern of world energy consumption between 2020 and 2050 (modeled in Figures 3, 4 and 5) suggests that a very concerning collapse may be ahead.

My model suggests that world energy consumption may fall to about 28 gigajoules per capita per year by 2050 (for a reduced population of 2.8 billion). This is about the level of world energy consumption per capita for the world in 1900.

Alternatively, 28 gigajoules per capita is a little lower than the per capita energy consumption for India in 2019. Of course, some parts of the world might do better than this. For example, Mexico and Brazil both had energy consumption per capita of about 60 gigajoules per capita in 2019. Some countries might be able to do this well in 2050.

Using less energy after 2020 will lead to many changes. Governments will become smaller and provide fewer services such as paved roads. Often, these governments will cover smaller areas than those of countries today. Businesses will become smaller, more local, and more involved with goods rather than services. Individual citizens will be walking more, growing their own food, and doing much less home heating and cooling.

With less energy available, it will be necessary to cut back on fighting unfortunate natural occurrences, such as forest fires, downed electricity transmission lines after hurricanes, antibiotic resistant bacteria, and constantly mutating viruses. Thus, life expectancy is likely to decline.

[4] It is “demand,” and how high energy prices can be raised, that determines how large an energy supply will be available in the future.

I keep making this point in my posts because I sense that it is poorly understood. The big problem that we should be anticipating is energy producers going out of business because energy prices are chronically too low. I see five ways in which energy prices might theoretically be raised:

  1. A truly booming world economy. This is what raised prices in the 1970s and in the run up to 2008. If there are truly more people who can afford homes and new vehicles, and governments that can afford new roads and other infrastructure, companies extracting oil and coal will build new facilities in higher-cost locations, and thereby expand world supply. The higher prices will help energy companies to be profitable, despite their higher costs. Such a scenario seems very unlikely, given where we are now.
  2. Government mandates and subsidies. Government mandates are what is maintaining demand for renewables and electric vehicles. Conversely, government mandates are part of what is keeping down tourist travel. Indirectly, this lack of demand relating to travel leads to low oil prices. A government mandate for people to engage in more travel seems unlikely.
  3. Much reduced wage disparity. If everyone, rich or poor, can afford nice homes, automobiles, and cell phones, commodity prices will tend to be high because buying and operating goods such as these requires the use of commodities. Governments can attempt to fix wage disparity through more printed money, but I am doubtful that this approach will really work because other countries are likely to be unwilling to accept this printed money.
  4. More debt, sometimes leading to collapsing debt bubbles. Spending can be enhanced if it becomes easier for citizens to buy goods such as homes and vehicles on credit. Likewise, businesses can borrow money to build new factories or, alternatively, to continue to pay wages to workers, even if there isn’t much demand for the goods and services sold. But, if the economy really is not recovering rapidly, these approaches can be expected to lead to crashes.
  5. Getting rid of COVID-19 inefficiencies and fearfulness. Economies around the world are being depressed to varying degrees by continued inefficiencies caused by social distancing requirements and by fearfulness. If these issues could be eliminated, it might boost economies back up to the already somewhat depressed levels of early 2020.

In summary, the issue we are facing is that oil demand (and thus prices) were far too low for oil producers because of wage disparity before the COVID-19 crisis arrived in March. Trying to get demand back up through more debt seems likely to lead to debt bubbles, which will be in danger of collapsing. There may be temporary price spikes, but a permanent fix is virtually impossible. This is why I am forecasting the severe drop in energy consumption shown in Figures 3 and 4.

[5] We humans don’t need to figure out how to fix the economy optimally between now and 2050.

The economy is a self-organizing system that will figure out on its own the optimal way of “dissipating” energy, to the extent possible. In physics terms, the economy is a dissipative structure. If the energy resource is food, energy will be dissipated by digesting the food. In the case of fossil fuel, energy will be dissipated by burning it. We may like to think that we are in charge, but we really are not. It is the laws of physics, or perhaps the Power behind the laws of physics, that is in charge.

Dissipative structures are not permanent. For example, hurricanes and tornadoes are dissipative structures. Plants and animals are dissipative structures. Eventually, new smaller economies, encompassing smaller areas of the world, may replace the existing world economy.

[6] This is a recent video of a panel discussion on “Energy Is the Economy.”

Chris Martenson is the moderator. Art Berman, Richard Heinberg and I are panelists. The Peak Prosperity folks were kind enough to provide me a copy to put up on my website.

Video of Panel Discussion “Energy Is the Economy,” created in October 2020 by Peak Prosperity. Chris Martenson (upper right) is the moderator. Richard Heinberg (upper left), Art Berman (lower left) and Gail Tverberg (lower right) are panelists.

A transcript of this panel discussion can be accessed at this link:

This entry was posted in Financial Implications and tagged , , , by Gail Tverberg. Bookmark the permalink.

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.

2,322 thoughts on “Energy Is the Economy; Shrinkage in Energy Supply Leads to Conflict

  1. “According to Goldman Sachs, Ankara spent more than $100 billion of its currency reserves in 2020 to support the Turkish Lira.

    The Turkish government’s inability to deliver on its vague promises to secure the strengthening of national currency will accelerate the depreciation of the Turkish Lira, which could further worsen Turkey’s fragile external financial situation.”

      • We already have enough deadly diseases circulating, maybe more than a hundred, that have been with us for time out of mind…there has been no reference to these because they would bring perspective to the narrative.

        Whatever you believe, whatever you choose to believe, is none of the government’s business. Their only roll is to protect you from people who would use force to have it otherwise.

        And btw, I listened a few hours ago to your Mortensen panel interview and was perplexed at their non response to your comments which were an order above theirs in ways I can’t briefly say.

        • The others on the panel come from a “peak oil” perspective. They seem to think that we will run out of oil and have high prices. Chris Martenson (the moderator) has some idea that my ideas are different, but Richard Heinberg and Art Berman are mostly clueless. Chris picked up on some of the things I was saying, and changed his direction of questioning accordingly. I think he originally was thinking this would be a “high price oil” discussion.

  2. this man wants to overthrow the french government.
    Does that kind of thing happen elsewhere? except in the US where Trump wants to overthrow Biden..
    The period is really entertaining!

    • But he’s speaking in Down’s syndrome Latin. The most important inhabitants of the world will not be able to understand it.

    • Overthrown governments are to be expected in a time without enough energy to go around.

      In fact, if a nation divides into multiple parts, it likely gets rid of some of the overhead and the parts are each more homogenous within themselves. The homogeneity also tends to make it easier to govern the separate parts.

      This is an interesting time!

      • Fingers crossed it happens to Canada. Balkinization will help areas with resources like Alberta to soften the hard landing of bad resource policy and the pillaging of the provincial economy of billions of dollars a year in the unfair policy of transfer payments.

        • Considering the ongoing unprofitability of the oil sector, it’s hard to imagine how Alberta would mitigate the economic hardship in case if it becomes independant.

      • I was thinking the same thing. Biden is the usurper here. He’s the old pretender.

        Top paraphrase the Gospel according to Mathew (if I may do that without becoming subject to a fatwa), “many are called, but few are Biden.”

    • As we see in the US, such coups are not easy. Biden just overthrew the legal popular vote by stuffing the ballot box to an insane degree in four metro areas (plus a few less sensational shenanigans) while underperforming Hillary’s 2016 campaign every where else in the country. But he will also have to overthrow a few swing state legislatures, the US Supreme Court, and the House of Representatives. That is a daunting task.

  3. A wonderfully insightful and sarcastic piece by Andrew Rawnsley of the Guardian about Boris:


    ‘Enormous challenges face Mr Johnson as we approach the turn of the year. Little wonder he prefers to take himself off into a future world where the Royal Navy zaps Johnny Foreigner with laser weapons.’

  4. There is nothing to fear about the Great Reset.

    It is , basically, resetting the world back to what it was before the World Wars.

    Thanks to misguided ‘heroes’ like Gavrilo Princip, Joe Gallieni and Chuck Fitzclarence, who thought they were doing their duty and fighting for their country but instead caused the Great War, and armed the natives who began to demand a greater share of participation in the world economy because the Imperial Powers did not think too far ahead of the consequences,

    the world became, well, inundated with 6 billion Third Worlders who got to have a semblance of modern lifestyle.

    And that is simply not sustainable.

    A world where every jungle village has motorboats and motorcycles is simply not sustainable. Back to canoes and feet.

    The Great Reset, basically, is to exclude them and the poorer people in the First World from civilization so the remaining resources can be concentrated and spent by people who are more likely to advance civilization to the next stage, to the stars.

    If one is old enough to afford to not care, or is rich enough to join the new stage of civ, then great. Otherwise, you are out of luck. Sorry.

    • That would mean return to the old good “stability” of two Keisers, Czar, British Emperor, .. and their vast empires. That’s clearly not possible looking at today’s fractured maps and news / trends all over the globe. And as our host Gail also mentioned (based in part on discussion here) in few recent articles, the road ahead will be likely signified by further process of fragmentation – balkanization, i.e. centralized control exerted over way smaller dominions (areas) from now on..

    • If there is a “great reset” it will only serve to kick the can on the moribund western liberal economic world order down the road by a few more years. Then kaput, followed by dieoff. No interstellar civilisation for terrestial monkeys. Space is, after all, God’s great quarantine zone.

    • “The Great Reset, basically, is to exclude them and the poorer people in the First World from civilization so the remaining resources can be concentrated and spent by people who are more likely to advance civilization to the next stage, to the stars.”

      with or without a Great Reset, the remaining resources will be concentrating in the Core as has been discussed here often.

      spreading resources equally is unnatural and leads to demise.

      unequal allocation gives a much greater chance of some survivors.

      then, they will attempt to reach “to the stars” and fail miserably.

      past progress gives the illusion that humans will continue the progress to the stars.

      it’s already apparent that the human imagination of sci-fi adventure has far surpassed any future reality.

      perhaps a woman on the moon with the “next man” probably a “person of color”.

      some low orbit space flights for the ultra rich.

      the end of progress is coming soon.

      • “the end of progress is coming soon.” — That sounds too optimistic to my ear, sort of like a “permanently high plateau.” I think of our time not so much as the end of something familiar, but the beginning of something new, the Grand Reversal or the Great Unwind. People like words such “new,” “grand,” and “great.” Perhaps they will make people feel more positive about the future, or at least willing to think about it. “A grand new future awaits us, almost beyond our imaginations!” If I ever run for President, that will be my campaign slogan. Hopefully no one will read the fine print. “My opponent who is promising growth and progress seeks to ‘turn back the clock,’ but I promise to face our grand, new future with courage!” (Just don’t ask me what that entails.)

        When the Great Contraction gets underway, promises to divide the pie more equally will become more popular than ever, but people will be bitterly disappointed when they begin to figure out that they are getting more equal shares of a progressively smaller pie, which will finally lead some of them to turn back to candidates who promise to once again expand the pie via some formula for voodoo economics which most voters will not try to understand so long as it gives them feelings of hope. If Americans are divided now, just wait until the pie they are fighting over starts getting smaller. The political struggle is likely to become a lot more bitter and ruthless than it already is.

    • There may very well be many episodes of COVID-19 and its successors. I am not certain that we really know what approach is best. Japan and the Far East seems to be doing amazingly well in keeping cases down so far.

      • I know what response is better than Sweden’s. The response where older people isn’t murdered by a herd immunity loonie institution.

  5. Hello,
    Do you care to comment other prognosis that say that energy consumption will increase
    to 2020?



    • All of these forecasts are based on the assumption that “of course” energy prices will rise. “Of course” the world can immediately get over COVID-19 and go back to normal. There is a strong belief that if we know that we have the technical capability to extract oil (or gas or coal) from the ground, then certainly we will do so. These energy projections are basically “momentum” projections, without understanding what is going wrong with the overall economic system.

      None of the people making these forecasts have figured out that the issue we are facing now is “overshoot and collapse.” Fundamentally, the world’s population has outgrown its resource base. Energy consumption per capita is no longer rising the way it was in the past. In fact, in 2020, energy consumption per capita is falling, partly because of shut-in orders because of COVID-19, but partly because of other issues. The world economy was faltering even before COVID-19 came along. Automobile sales were falling in many countries in 2019, including China and India. Cell phone sales were also faltering. These are signs of an economy reaching limits.

      The people haven’t stopped to think that today’s economic models (which are based on momentum, rather than anything else) are basically wrong. The world economy runs into limits of many different kinds, including too much wage disparity, too much debt, and too much pollution. We encounter diminishing returns in extracting minerals of all kinds. Infectious diseases become an increasing problems. We start consuming smaller quantities of energy products, and this starts a downward spiral that we cannot stop.

      We have taken a major step down in 2020. It is hard to see that this will turn around in 2021. We are reaching too many limits simultaneously. An amazing vaccine can, at best, get the economy back to the poor condition it was in early 2020. We have a new round of closures and a new round of debt defaults coming in 2021. We cannot get oil, gas and coal prices up to the level producers need, without making finished goods, made with these energy products, too expensive for consumers to afford.

      • Maybe we don’t need to increase the amount of energy.

        Frequently you mention health care costs, as I understand it most of those costs are in the last year of life – well, cut short that last year for significant savings. The largest Federal costs in the US are entitlements, that hits close to home for me.

        It would be interesting to know the healthcare cost savings from Covid-19. Mayo does not appear to be as busy as it was a year ago, what happens to the local economy in a year may or may not confirm that.

        This may be an age distribution problem more than a population problem. The older end of the tail is getting fatter, sometimes the fat gets cut, the old use capital less efficiently, we slow down, even with a trainer.

        The other points are well taken, except I think we will go forward, the capital to do so may well come by cutting healthcare costs, the largest costs always are cut first it would seem.

        Dennis L.

        • and when men in white coats show up at your house and say:

          Our algorithm shows that you have less than a year to live—please come with us.



          the ‘way forward’ is not through cutting cost, but by inputting more energy, and finding buyier for the products created by that energy.

          • It is always per capita.

            Saw a movie once, Amerindians, when a squaw’s husband died, two of her fingers were cut off, her tepee cut into strips and she was left to wander.

            Eskimo’s were said to place the old on icebergs to feed the polar bears and continue the circle of life.

            Moving diseased people into nursing homes, how did that work?

            Not much difference.

            Dennis L.

            • thats fine by me

              but I still say you won’t be best pleased when you’re left on the iceberg

              or when your granny’s teepee has been cut into strips

            • I thought we’d dealt with all that off planet hopium stuff

              (hopefully) for the last time, we can only resource stuff off planet by utilising the resources and energy we have on planet

              off planet means using technology not yet invented through means not yet available to produce materials we have no use for at prices we can’t afford.

              how clear does in have to be?

            • Bronowski wrote about the Bakhtiari tribe who wander the highlands of Iranian plateau in The Ascent of Man. As nomads with few resources, they are compelled to leave the old and infirm behind when they get too old and infirm to ford a river. It’s a part of everyday human life for them.

              It is not possible in the nomad life to make things that will not be needed for several weeks. They could not be carried. And in fact the Bakhtiari do not know how to make them. If they need metal pots, they barter them from settled peoples or from a caste of gipsy workers who specialise in metals. A nail, a stirrup, a toy, or a child’s bell is something that is traded from outside the tribe. The Bakhtiari life is too narrow to have time or skill for specialisation. There is no room for innovation, because there is not time, on the move, between evening and morning, coming and going all their lives, to develop a new device or a new thought – not even a new tune. The only habits that survive are the old habits. The only ambition of the son is to be like the father.

              It is a life without features. Every night is the end of a day like the last, and every morning will be the beginning of a journey like the day before. When the day breaks, there is one question in everyone’s mind: Can the flock be got over the next high pass? One day on the journey, the highest pass of all must be crossed. This is the pass Zadeku, twelve thousand feet high on the Zagros, which the flock must somehow struggle through or skirt in its upper reaches. For the tribe must move on, the herdsman must find new pastures every day, because at these heights grazing is exhausted in a single day.

              Every year the Bakhtiari cross six ranges of mountains on the outward journey (and cross them again to come back). They march through snow and the spring flood water. And in only one respect has their life advanced beyond that of ten thousand years ago. The nomads of that time had to travel on foot and carry their own packs. The Bakhtiari have pack-animals – horses, donkeys, mules – which have only been domesticated since that time. Nothing else in their lives is new. And nothing is memorable. Nomads have no memorials, even to the dead. (Where is Bakhtyar, where was Jacob buried?) The only mounds that they build are to mark the way at such places as the Pass of the Women, treacherous but easier for the animals than the high pass.

              The spring migration of the Bakhtiari is a heroic adventure; and yet the Bakhtiari are not so much heroic as stoic. They are resigned because the adventure leads nowhere. The summer pastures themselves will only be a stopping place – unlike the children of Israel, for them there is no promised land. The head of the family has worked seven years, as Jacob did, to build a flock of fifty sheep and goats. He expects to lose ten of them in the migration if things go well. If they go badly, he may lose twenty out of that fifty. Those are the odds of the nomad life, year in and year out. And beyond that, at the end of the journey, there will still be nothing except an immense, traditional resignation.

              Who knows, in any one year, whether the old when they have crossed the passes will be able to face the final test: the crossing of the Bazuft River? Three months of melt-water have swollen the river. The tribesmen, the women, the pack animals and the flocks are all exhausted. It will take a day to manhandle the flocks across the river. But this, here, now is the testing day. Today is the day on which the young become men, because the survival of the herd and the family depends on their strength. Crossing the Bazuft River is like crossing the Jordan; it is the baptism to manhood. For the young man, life for a moment comes alive now. And for the old – for the old, it dies.

              What happens to the old when they cannot cross the last river? Nothing. They stay behind to die. Only the dog is puzzled to see a man abandoned. The man accepts the nomad custom; he has come to the end of his journey, and there is no place at the end.

          • Norman, much simpler solution, simply stop paying many life extending procedures through Medicare cuts, no money, no service, or increase deductibles to huge amounts. You are in Great Britain I think, isn’t that what the National Health Service has done? You can get free care, next year, you life expectancy without care is six months – an example only, don’t have a clue about the real numbers.

            Many solutions here are acknowledged to be non solutions. We look for emotionally satisfying solutions, there are no easy solutions,

            Put more energy into this old earth, we all die, the planet can’t take anymore. Keep growing the economy through any energy source and based upon past exponential growth the surface goes above boiling point of water.

            Going to have to think out of the box. Those who can are going forward, upward if you like. Norman, there is nothing left here that can be extracted with any degree of profitability, we have beaten that one to death. Oil does not work economically, it is over; exporters are going broke, Exxon is going broke, frackers are going broke and people are going broke trying to buy the stuff.

            A solution you offered was plywood boxes. Norman, no plumbing, that is literally a Rx for death of cities, plumbing is public health. I’ll bet on space any time, it is forward, it is hope, plywood boxes are despair from my viewpoint. Move industry off earth, move pollution from industry off earth, move fission safety issues off earth, let the earth heal, it will heal with us or without us.

            All the best,

            Dennis L.

            • “Going to have to think out of the box. Those who can are going forward, upward if you like. Norman, there is nothing left here that can be extracted with any degree of profitability, we have beaten that one to death. Oil does not work economically, it is over; exporters are going broke, Exxon is going broke, frackers are going broke and people are going broke trying to buy the stuff.”

              here’s my repeated version of outside the box:

              a barrel of oil contains roughly the same amount of energy as 4 years of human labour.

              without this energy, the world becomes much poorer. In fact, without this energy, we can totally write off any potential for space projects.

              the price/profit/economics of oil is the problem, and letting that problem take away a massive amount of energy from the economy would be a far worse problem.

              nationalize oil, and remove the price/profit problem while retaining the massive net (surplus) energy.

              then the space guys can continue to do their projects and maybe impress some chicks.

              without the net (surplus) energy of oil, there will be no more impressive guy projects, and the chicks will be wondering what happened.

            • Dennis L wrote: “Keep growing the economy through any energy source and based upon past exponential growth the surface goes above boiling point of water.”

              Exactly! And IF ever increasing energy consumption were possible (it’s not), the “cooking point” would arrive much faster than most people imagine.

              All the “solutions” boil down to: “New technology WILL be invented and it WILL let us access energy resources we cannot tap with today’s tech, and the new tech WILL always arrive just in the nick of time. Only have faith in the technology priesthood! The engineers will deliver us!”

              It’s just a high tech Cargo Cult, and its kingdom is thoroughly of this world rather than the next. People are going to be bitterly disappointed.

              Marxism has always been utopian, but capitalism was supposed to be a sane and sober concept described by a “dismal science,” offering merely a path that was less bad than feudalism, but somehow capitalism seems to have transformed into a rival utopian “theology” that promises us permanent liberation from the limits of a finite creation.

              We are going to hit the wall, and we are determined to do it at full speed.

            • We are incredibly fortunate to have an infinite heat sink literally on our doorstep in the shape of outer space into which to radiate planetary heat, thereby preventing us from all being baked, broiled and barbecued to a crisp.

              We are also blessed by the physical law that says colloquially that the hotter the object, the more it radiates. Thanks to this feature of the Universe, the hotter the Earth gets, the more vigorously it radiates heat energy into space.

              Moreover, what a boon it is to live on a planet with a Goldilocks atmosphere (not too thin like Mars nor too thick like Venus, but just right) and a surface covered 70% by liquid water at a distance from our local star that allows the bulk of this water to remain at the low end (temperature-wise) of its liquid phase. This allows the water to help regulate the amount of heat the atmosphere holds rendering the average temperature remarkably stable, pleasant, comfortable and optimal.

              Yes, the more I sit back on my Ottoman couch nibbling Muscat grapes and pondering the question, the more I am convinced that this is indeed the best of all possible worlds.

            • Rather like the offbeat observation by Douglas Adams, that if a puddle was capable of rational thinking, it would come to the conclusion that the hole it was in would have been made exclusively for its personal use and benefit.

            • The book “Rare Earth: Why Complex Life is Uncommon in the Universe” by Peter Ward and Donald Brownlee (published in 2000) makes this point. The earth has an amazing combination of characteristics that make it a welcoming place for humans.

            • Dennis

              The part you ignore is that of who exactly is going to initiate and instigate all this social engineering—assuming for a brief moment that it is possible?

              Are you going to be the one issuing the orders that granny should be put to sleep now?

              because if you go into social engineering, which is what you are advocating, then someone has to run it.
              And teams of people have to physically put it into practice.

              maybe you could come up with suggestion about would be agreeable to everybody.
              (Other than wish politics though)


              As to the oil producers etc going broke, that’s because their continued solvency depends on infinitely increasing energy-flows.

              That is the only way employment / wages can function in real terms because they are derived from energy surplus, not just energy itself.

              As forecast by many people, we are fast approaching the EROEI bottom limit at which industrial civilisation can function.

              That might be say—14:1, certainly no lower than 10:1. Trouble is, we don’t know exactly, and we are deluding ourselves that oil is still delivering 100:1 like it used to.

              To do that we are borrowing (from the future) to make up the difference. This supports our ‘now’.

              Simplistic I know, but if you divide 100 by 14, you get 7.

              And in an earlier comment I pointed out that one $ about 50/60 years ago bought about 7 x as much energy as a dollar does today.

              Neat huh?

              But that’s your lifestyle down the pan, or the American dream, Call it what you will.

              It isn’t possible to borrow wages

            • I think we are already past the EROEI bottom limit. It is really an overall limit, for the energy mix we have. Wind and solar EROEIs are not calculated correctly, with the rest, making the result confusing.

      • Thanks for replying Gail! It must get tedious. All to get a reply of maybe we dont need to increase the energy. Well were certainly going to find out what happens to us with less energy. Dennis I dont think you have very long to convince yourself everything will be just peachy before something breaks hard.

      • I totally disagree that consumer goods need to remain affordable to the average “joe and jane” in order for energy prices to rise. Rising prices just mean that wealthier buyers (both higher class consumers and government, plus universal demands for things like food and winter heat) will be driving the demand. Demand does not need to rise in order for price to rise. Indeed, prices can actually rise while demand falls if reserves are falling even faster than demand.

        To say that oil or other fossil fuel prices will stabilize for the first time in history, and furthermore will stabilize at a price at which no consumers can buy and no producers can produce is just like predicting that food prices will stabilize at a point where no eaters can afford to buy food and no growers can afford to grow food.

        One could, of course, argue that while food is essential to life, oil is not, but in an economy where each calorie of food consumed requires between 6 and 11 calories of fossil fuel to produce, that would not strike me as a particularly sound argument either.

        Right now, more oil is still being produced than users want to buy. When that reverses, I “boldly” predict that the price will rise sharply (which is like “boldly” predicting that the sun will continue to rise in the east!). Eventually, falling production will drive prices higher even if absolute (but not relative) demand also falls. If oil costs more than some parties can afford, they will simply use less of it while paying more per joule rather than swear off oil altogether.

        • You evidently don’t understand how a self-organizing economy works. The big thing that consumption of energy products provides is jobs that pay fairly well. The fact that people have jobs that pay well allows them to buy other goods and services. This is what allows prices to remain high enough.

          Thinking that demand for food will always remain is wrong. Supply chains to deliver that food to buyer, at a low enough price, need to remain in place. We saw many farmers plowing under crops and throwing out milk, when shutdowns were ordered this spring.

          I fully expect that “more oil is still being produced than users want to buy” will continue to be the case, pretty much forever in the future. If you think about consumption of cheap-to-produce energy providing jobs, and lack of consumption of adequate energy leading to wage disparity, you can see the problem that arises. The low wage people cannot buy enough goods made with commodities, and commodity prices fall too low. The system comes to a halt.

  6. Excess capital and claims on same:

    Perhaps sometimes capital piles up and in effect degrades with time if not used so some use is better than none and some might even work. Hence ECB supporting various countries.

    Could derivatives and such be an attempt to make the flow of capital more or less linear? To make use of it before it degrades simply by sitting on a shelf. Gold would fulfill this role, but it has never really worked in history, it is not organic. Some really crazy ideas in retrospect turn out to be most reasonable, the trick is recognizing them before hand.

    Dennis L.

    • Derivatives are just a form of “insurance,’ a way of off loading risk. However, many of the “insurers” will be unable to pay off if too many of the “policies” they have sold must be redeemed at once.

      • Nehemiah,

        Derivatives are used by banks in the form of overnight repos and reverse repos to balance out cash needs which in part are clearing issues – an example of making flow of capital continuous and not discrete. There should be very little risk involved as it is not an insurance issue.

        Dennis L.

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