2021: More troubles likely

Most people expect that the economy of 2021 will be an improvement from 2020. I don’t think so. Perhaps COVID-19 will be somewhat better, but other aspects of the economy will likely be worse.

Back in November 2020, I showed a chart illustrating the path that energy consumption seems to be on. The sharp downturn in energy consumption has occurred partly because the cost of oil, gas and coal production tends to rise, since the portion that is least expensive to extract and ship tends to be removed first.

At the same time, prices that energy producers are able to charge their customers don’t rise enough to compensate for their higher costs. Ultimate customers are ordinary wage earners, and their wages are not escalating as rapidly as fossil fuel production and delivery costs. It is the low selling price of fossil fuels, relative to the rising cost of production, that causes a collapse in the production of fossil fuels. This is the crisis we are now facing.

Figure 1. 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.

With lower energy consumption, many things tend to go wrong at once: The rich get richer while the poor get poorer. Protests and uprisings become more common. The poorer citizens and those already in poor health become more vulnerable to communicable diseases. Governments feel a need to control their populations, partly to keep down protests and partly to prevent the further spread of disease.

If we look at the situation shown on Figure 1 on a per capita basis, the graph doesn’t look quite as steep, because lower energy consumption tends to bring down population. This reduction in population can come from many different causes, including illnesses, fewer babies born, less access to medical care, inadequate clean water and starvation.

Figure 2. Amounts shown in Figure 1, 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 1. World population drops to 2.8 billion by 2050.

What Is Ahead for 2021?

In many ways, it is good that we really don’t know what is ahead for 2021. All aspects of GDP production require energy consumption. A huge drop in energy consumption is likely to mean disruption in the world economy of varying types for many years to come. If the situation is likely to be bad, many of us don’t really want to know how bad.

We know that many civilizations have had the same problem that the world does today. It usually goes by the name “Collapse” or “Overshoot and Collapse.” The problem is that the population becomes too large for the resource base. At the same time, available resources may degrade (soils erode or lose fertility, mines deplete, fossil fuels become harder to extract). Eventually, the economy becomes so weakened that any minor disturbance – attack from an outside army, or shift in weather patterns, or communicable disease that raises the death rate a bit – threatens to bring down the whole system. I see our current economic problem as much more of an energy problem than a COVID-19 problem.

We know that when earlier civilizations collapsed, the downfall tended not to happen all at once. Based on an analysis by Peter Turchin and Sergey Nefedov in their book, Secular Cycles, economies tended to first hit a period of stagflation, for perhaps 40 or 50 years. In a way, today’s economy has been in a period of stagflation since the 1970s, when it became apparent that oil was becoming more difficult to extract. To hide the problem, increasing debt was issued at ever-lower interest rates.

According to Turchin and Nefedov, the stagflation stage eventually moves into a steeper “crisis” period, marked by overturned governments, debt defaults, and falling population. In the examples analyzed by Turchin and Nefedov, this crisis portion of the cycle took 20 to 50 years. It seems to me that the world economy reached the beginning of the crisis period in 2020 when lockdowns in response to the novel coronavirus pushed the weakened world economy down further.

The examples examined by Turchin and Nefedov occurred in the time period before fossil fuels were widely used. It may very well be that the current collapse takes place more rapidly than those in the past, because of dependency on international supply lines and an international banking system. The world economy is also very dependent on electricity–something that may not last. Thus, there seems to be a chance that the crisis phase may last a shorter length of time than 20 to 50 years. It likely won’t last only a year or two, however. The economy can be expected to fall apart, but somewhat slowly. The big questions are, “How slowly?” “Can some parts continue for years, while others disappear quickly?”

Some Kinds of Things to Expect in 2021 (and beyond)

[1] More overturned governments and attempts at overturned governments.

With increasing wage disparity, there tend to be more and more unhappy workers at the bottom end of the wage distribution. At the same time, there are likely to be people who are unhappy with the need for high taxes to try to fix the problems of the people at the bottom end of the wage distribution. Either of these groups can attempt to overturn their government if the government’s handling of current problems is not to the group’s liking.

[2] More debt defaults.

During the stagflation period that the world economy has been through, more and more debt has been added at ever-lower interest rates. Much of this huge amount of debt relates to property that is no longer of much use (airplanes without passengers; office buildings that are no longer needed because people now work at home; restaurants without enough patrons; factories without enough orders). Governments will try to avoid defaults as long as possible, but eventually, the unreasonableness of this situation will prevail. The impact of defaults can be expected to affect many parts of the economy, including banks, insurance companies and pension plans.

[3] Extraordinarily slow progress in defeating COVID-19.

There seems to be a significant chance that COVID-19 is lab-made. In fact, the many variations of COVID-19 may also be lab made. Researchers around the world have been studying “Gain of Function” in viruses for more than 20 years, allowing the researchers to “tweak” viruses in whatever way they desire. There seem to be several variations on the original virus now. A suicidal/homicidal researcher could decide to “take out” as many other people as possible, by creating yet another variation on COVID-19.

To make matters worse, immunity to coronaviruses in general doesn’t seem to be very long lasting. According to an October 2020 article, 35-year study hints that coronavirus immunity doesn’t last long. Analyzing other coronaviruses, it concluded that immunity tends to disappear quite quickly, leading to an annual cycle of illnesses such as colds. There seems to be a substantial chance that COVID-19 will return on an annual basis. If vaccines generate a similar immunity pattern, we will be facing an issue of needing new vaccines every year, as we do with the flu.

[4] Cutbacks on education of many kinds.

Many people getting advanced degrees find that the time and expense did not lead to an adequate financial reward afterwards. At the same time, universities find that there are not many grants to support faculty, outside of the STEM (Science, Technology, Engineering and Math) fields. With this combination of problems, universities with limited budgets make the financial decision to reduce or eliminate programs with reduced student interest and no outside funding.

At the same time, if local school districts find themselves short of funds, they may choose to use distance learning, simply to save money. This type of cutback could affect grade school children, especially in poor areas.

[5] Increasing loss of the top layers of governments.

It takes money/energy to support extra layers of government. The UK is now completely out of the European Union. We can expect to see more changes of this type. The UK may dissolve into smaller regions. Other parts of the EU may leave. This problem could affect many countries around the world, such as China or countries of the Middle East.

[6] Less globalization; more competition among countries.

Every country is struggling with the problem of not enough jobs that pay well. This is really an energy-related problem. Instead of co-operating, countries will tend to increasingly compete, in the hope that their country can somehow get a larger share of the higher-paying jobs. Tariffs will continue to be popular.

[7] More empty shelves in stores.

In 2020, we discovered that supply lines can break, making it impossible to purchase products a person expects. In fact, new governmental rules can have the same impact, for example, if a country bans travel to its country. We should expect more of this in 2021, and in the years ahead.

[8] More electrical outages, especially in locations where reliance on intermittent wind and solar for electricity is high.

In most places in the world, oil products were available before electricity. On the way down, we should expect to see the reverse of this pattern: Electricity will disappear first because it is hardest to maintain a constant supply. Oil will be available, at least as long as is electricity.

There is a popular belief that we will “run out of oil,” and that renewable electricity can be a solution. I do not think that intermittent electricity can be a solution for anything. It works poorly. At most, it acts as a temporary extender to fossil fuel-provided electricity.

[9] Possible hyperinflation, as countries issue more and more debt and no longer trust each other.

I often say that I expect oil and energy prices to stay low, but this doesn’t really hold if many countries around the world issue more and more government debt as a way to try to keep businesses from failing, debt from defaulting, and stock market prices inflated. There is a danger that all prices will inflate, and that sellers of products will no longer accept the hyperinflated currency that countries around the world are trying to provide.

My concern is that international trade will break down to a significant extent as hyperinflation of all currencies becomes a problem. The higher prices of oil and other energy products won’t really lead to any more production because prices of all goods and services will be inflating at the same time; fossil fuel producers will not get any special benefit from these higher prices.

If a significant loss of trade occurs, there will be even more empty shelves because there is very little any one country can make on its own. Without adequate goods, population loss may be very high.

[10] New ways of countries trying to fight with each other.

When there are not enough resources to go around, historically, wars have been fought. I expect wars will continue to be fought, but the approaches will “look different” than in the past. They may involve tariffs on imported goods. They may involve the use of laboratory-made viruses. They may involve attacking the internet of another country, or its electrical distribution system. There may be no officially declared war. Strange things may simply take place that no one understands, without realizing that the country is being attacked.

Conclusion

We seem to be headed for very bumpy waters in the years ahead, including 2021. Our real problem is an energy problem that we do not have a solution for.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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2,590 Responses to 2021: More troubles likely

  1. adonis says:

    here is my opinion over whether the co vid 19 was accidental or intentionally turned into the reality we are seeing now. This is all a co vid hoax which is being used to try to bring in the sustainable developement goals by a bunch of fearful elites who think these goals will save the world from the natural end of our finite resources unfortunately these goals will not save us from the “fast eddie challenge world” soon to be thrust onto us. All we can do now is sit back and enjoy the ride .

  2. Mirror on the wall says:

    Vaccine trade wars. UK and EU are fighting over vaccines and MEPs are threatening a trade war. That is what happens when there is not enough to go around. UK has not yet received any deal on financial services with the EU, so it will be interesting to see if this heats up.

    This spat could cost UK a trillion over a decade if it does. USA has already effectively banned UK from doing a trade deal with China maybe worth a trillion or two over a decade and Biden is in no rush to give UK a deal – the lost trillions are adding up.

    The UK press is content to be jingoistic about this spat.

    > EU demands British Covid vaccines

    Brussels has demanded that millions of British-made coronavirus vaccines are diverted from the UK to the EU in an increasingly bitter cross-Channel tug of war over the jabs.

    Boris Johnson flatly rejected the idea of allowing any UK-made AstraZeneca doses to be sent to the EU, saying he was “confident” the firm would honour its Britain-first contract for the first 100 million vials made in the UK.

    On Wednesday night, the European Commission summoned AstraZeneca bosses to the latest in a series of increasingly frantic meetings after the firm announced that 50 million doses ordered by the EU would be delayed.

    As recriminations grew increasingly bitter, influential MEPs stoked talk of a trade war, saying the UK and AstraZeneca had “better think twice” before refusing the EU’s demands and threatening to block exports of the Belgian-made Pfizer vaccine to the UK.

    It came as the vaccine rollout in some EU countries ground to a halt through lack of supplies, with one Spanish health official saying: “Tomorrow, the freezers will be empty.”

    However, Stella Kyriakides, the EU’s health Commissioner, said: “We reject the logic of first come, first served. That might work at the neighbourhood butchers but not on our contracts and not in our advanced purchase agreements.”

    Brussels claimed AstraZeneca was contractually obliged to use its UK factories to make up the shortfall in deliveries to the EU and called on it to publish its contract with the bloc for public scrutiny.

    Ms Kyriakides said the firm had “contractual, societal and moral obligations” to use all its facilities to make up the shortfall, and that there was “no hierarchy of factories”.

    However both the UK Government and AstraZeneca insisted the drugs giant’s contract with the UK – signed three months before the EU deal – made clear that British plants could only be used for exports once Britain’s order of 100 million doses had been fulfilled.

    https://www.telegraph.co.uk/politics/2021/01/27/eu-astrazeneca-vaccine-row-descends-farce-crunch-talks/

  3. TIm Groves says:

    Professor Dolores Cahill, speaking about RNA vaccines:

    “I suppose there are potentially three adverse reactions (from messenger RNA vaccines—MODERNA, PFIZER).

    Beginning with anaphylaxis (severe, potentially life-threatening allergic reaction) in the first week. Therefore, these vaccines shouldn’t be given in the 2nd dose.

    Then the real adverse events will happen, against whatever is the real mRNA in the vaccines, and when the person vaccinated comes across (this coronavirus) sometime later …. what happened in the animal studies, 20% or 50% or 100% of the animals died!

    Among people over 80, maybe about 2.5% will experience severe side effects, adverse events where people cannot work or live life normally.

    Then with the 2nd vaccination it could be 1 in 10 or ten percent. For the over 80-year-olds, I would think that 80% of them would have life-limiting reactions or die when they come across the messenger RNA again.

    For others (not elderly) it could be half of the people who could be severely harmed.

    What it does is… this gene therapy or medical device is setting up an autoimmune disease chronically. It’s like injecting people who have nut allergies with peanuts.

    It’s anaphylaxis in the first wave. It’s anaphylaxis +allergic reaction the 2nd wave. But the 3rd reaction occurs when you come across whatever the messenger RNA is against (virus, bacterium, etc.), and now you have stimulated your immune system to have a low-grade autoimmune disease, not immunity to yourself per se because the mRNA is expressing a viral protein.

    Now you made yourself a genetically modified organism, and so the immune system that is meant to push the viruses or bacteria out… now the autoimmune reaction is attacking your body low grade.

    Now (months later) when you come across the virus that stimulates the immune system to get rid of the virus and when it (the immune system) sees that you have viral proteins in your own cells and organs, then about a week later (the adaptive immune system kicks in, the mechanism that makes specific long-term memory antibodies against a pathogen) and you go into organ failure. Because your immune system is killing your own organs. Those patients will present as sepsis initially. Then (later) you die of organ failure.

    If you have one or two co-morbidities, the energy the immune system requires to boost your immune system will make the older person very tired and exhausted and they don’t have the capacity to survive if you have underlying conditions.

    Normally, because the mRNA is in every cell of their body, it’s almost unstoppable. It destroys the heart, or the spleen, or the lungs, or the liver because the mRNA is expressing the protein in every cell.

    Just as a solution, what we urgently need, just as a repository, 1 in 100, or 1 in 200 vaccine vials injected, to be set aside, especially into the elderly in the care homes. They need to be stored in a biorepository of the vaccine vials randomly, so when the people start to die, we can actually see what is in this vaccine. We should be doing this now.

    I am concerned that there are maybe multiple mRNAs in this vaccine, not just something for coronavirus. If it is influenza or other viruses, we would be priming these people to other natural (cold and flu) viruses that are circulating.

    We urgently need quality control to randomly require doctors to give 1 in 100 vaccine vials to a repository and someone like me could forensically analyze what’s in these vaccines. So, when the elderly start dying, we will know. We should be knowing now what’s in them.

    It’s absolutely a dangerous gene therapy. Should not be given to the elderly,” emphasized professor Cahill.”

    This is too hot for YouTube, but you can watch Delores on Rumble.

    https://rumble.com/vd9qv9-dolores-cahill-phd-speaking-about-mrna-vaccines.html

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