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 Prospectsand 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. An October 2020 article says, 35-year study hints that coronavirus immunity doesn’t last long. Analyzing other corona viruses, 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 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 or 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.


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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1,046 Responses to 2021: More troubles likely

  1. Harry McGibbs says:

    The debt question facing Janet Yellen: How much is too much?

    “In the past four years, US government debt held by the public has increased by $7 trillion to $21.6 trillion. President-elect Joe Biden has committed to a spending program that could add trillions more in the year ahead…

    “Among the skeptics is Valerie Ramey, an economist at the University of California San Diego. She said some economists see the gap between interest and growth rates as a “free lunch,” enabling more borrowing, but that it was more like a “free snack.” The gap tends to be relatively small over time, and now it is trivial compared with the growth of US debt.

    “What we are having here is just gluttony in terms of what the government is doing,” she said.

    “The IMF study’s authors have another warning about running large deficits. Fiscal-policy crises that push interest rates sharply higher tend to come out of nowhere, even when rates are low. “Market expectations can turn quickly and abruptly,” the authors, Paolo Mauro and Jing Zhou, concluded.”


    • Harry McGibbs says:

      “Print or collapse – The only trick left in the bag for the Government to keep the economic and financial system from complete collapse will be the implementation of massive “stimulus” programs… The dollar has lost 98% of its value vs gold since 1971.”


      • Harry McGibbs says:

        “The money created by the Fed is [now] not going only into excess reserves of the banking system. It is going directly into the bank accounts of individuals and firms through the US Paycheck Protection Program, stimulus cheques, and grants to state and local governments, [which is inflationary]…

        “…there is no such thing as a free lunch. It will be the Treasury bondholder, through rising inflation, who will be paying for the unprecedented fiscal and monetary stimulus over the past year.”


    • We know that anything that cannot go on indefinitely will stop. This debt bubble will collapse, just as many debt bubbles before have collapsed. The big issue is, “When?” Also, “How much of the world’s financial system does the collapse take with it?”

  2. Harry McGibbs says:

    “President Biden Has Limited Flexibility In Moving Against Oil Industry:

    “The Obama administration eventually had to accept that the booming domestic oil and gas industry was too important to the national economy and employment to dismantle.”


  3. Harry McGibbs says:

    ““With each passing day, the lives of Lebanon’s citizens, migrants and refugees is becoming more unbearable; the poverty rate has doubled and the extreme poverty rate has tripled in the past year,” Aya Majzoub, Lebanon researcher at Human Rights Watch, told DeutscheWelle.”


  4. Harry McGibbs says:

    “African central bankers meeting in the next two weeks amid a resurgent coronavirus may find they’ve used up most of their interest-rate ammunition to lift their economies out of recessions that still affect much of the continent.”


  5. Harry McGibbs says:

    “Militant attacks that have forced hundreds of thousands of people to flee their homes in Mozambique’s northern Cabo Delgado province have created a humanitarian crisis, the U.N. World Food Programme (WFP) said on Tuesday.

    ““What is happening is nothing short of a food security and nutritional crisis,” WFP spokesman Tomson Phiri told a U.N. briefing. “This is a humanitarian disaster.””


    • Harry McGibbs says:

      “Clashes between rival ethnic groups in Sudan’s South Darfur state have left 55 people dead, a day after more than 80 people were killed in separate clashes elsewhere in the restive region…

      “Key issues include land ownership and access to water.”


      • Harry McGibbs says:

        “Almost a quarter of Lesotho’s population will require food aid between January and March as a result of Covid-19 restrictions, the UN Food and Agriculture Organization (FAO) has warned.”


        • I looked up Lesotho in Wikipedia.

          Regarding employment, it says:

          The majority of households subsist on farming. The formal sector employment consists mainly of female workers in the apparel sector, male migrant labour, primarily miners in South Africa for three to nine months, and employment by the Government of Lesotho (GOL). The western lowlands form the main agricultural zone. Almost 50 percent of the population earn income through informal crop cultivation or animal husbandry with nearly two-thirds of the country’s income coming from the agricultural sector.

          Regarding resources, it says,

          Water and diamonds are Lesotho’s significant natural resources.

          Wikipedia makes it sound like Lesotho is completely self-sufficient in electricity, and also sells water to South Africa. If this is true, Lesotho is an example of a country with adequate electricity, but this not helping agriculture. I wonder how much the country’s debt payments are with respect to its dams, relative to the revenue that the sale of the hydroelectric power is providing.

          I would expect diamond prices to move with commodity prices in general. I cannot imagine that diamond exports are doing well right now, but I couldn’t find diamond prices/quantities. Female workers in the apparel industry are likely out of jobs as well.

  6. Harry McGibbs says:

    “North Korea on brink of famine as secretive state further cuts itself off from the world:

    “Observers warn of repeat of ‘Arduous March’ of 1990s when millions died of starvation… the food situation for many North Koreans is clearly extremely precarious.”


    • Harry McGibbs says:

      “According to the new figures, over 18 million people in Afghanistan, including 9.7 million children, are desperately in need of life-saving support, including food…”


      • Afghanistan is another “too little energy consumption per capita” country. The fact that the country is land-locked is a major handicap because both imports and exports require expensive over-land transport, raising the cost of imports and making exports less competitive. The transport clearly requires energy as well.

        Another issue is lack of adequate water for cooling towers for electric generation requiring such towers. Nuclear is often situated at the edge of the ocean, to provide adequate water supply.

    • N Korea is on the brink of famine because an insane leadership deludes itself that world class armaments are affordable.

      the USA has just authorised a defence budget package of $1.4 trn. when 40+ million people are on food aid, the infrastructure is crumbling, and mass healthcare does not exist

      But at least soldiers in both countries are employed

      other than that I can’t see much difference

      • The railway system in NK is probably in better shape and hauls more cargo, comparatively speaking. As we march through the deGrowth vortex such “plus and minus” points will be quickly reminding people that..

        • rail road or air system is irrelevant

          if the rail system is too heavily involved in supporting the armaments fantasy, then it is equally involved in crashing the economy

          transport systems consume energy

          • Another hint, there could come a point where “famines” in both places became “shockingly” of more or less the same severity.. or even these places switch the pole position, perhaps also thanks to that rail factor..

            • I agree absolutely

              when uk had a navy as big as any 2 others in the world, poverty and starvation were rife.

              At the start of ww 1, recruits from the working class were 6” shorter on average than those of the elite rich

              The correlation is clear

        • Mirror on the wall says:

          Degrowth will be presented to us as ‘green’ – ‘moral’ and even ‘holy’.

          “Oh look at what good people we are, degrowing economies for the planet’s sake.”

          Which raises questions about how gullible we are and how we have been manipulated with the same basic tricks through the centuries.

          “The Lord God made them high and low and ordered their estate.”

          “Blessed are the poor.”

          Morality and religion are often used by the state as social control of the gullible masses.

          ‘Humilty, lowliness, poverty, frugality, loyalty, service’ – feudal ‘values’ for peasants.

          Arguably we are headed for a neo-feudalism and ‘greenism’ is a part of that. ‘Eco-austerity’ – penance and ‘virtue’ for the ‘new age’.

          • Robert Firth says:

            “The Lord God made them high and low and ordered their estate.”

            I used to sing that hymn as a schoolboy. But I remember it a little differently:

            “The rich man in his castle
            The poor man at his gate
            God made them high and lowly
            And ordered their estate.”

            And a quick trip via Google informs me that I was letter perfect. The wonders of the human associative memory never cease to amaze me.

    • North Korea is on the brink of famine because of too little energy consumption per capita. They are in a fairly cold area, so they need some energy for heating. They are not able to fertilize crops enough and mechanize production.

      There is little “demand” from the many poor citizens. The only demand can come from government spending. Like many other resource-poor countries, this spending comes on the military. It at least provides some jobs and demand.

      • but surely military spending just drains what little surplus there is, it doesn’t alleviate the food deficit of the mass of the people

        shouldn’t that be too little energy availability per capita

  7. D3G says:


    I’m hesitant to offer another video for you to watch, Norman, but here goes. 😁 It’s a short overview which might inspire you to learn more about plant based nutrition. Cheers, D3G. Thanks for the use of your cushion.


    • Thanks for that video—I learned a lot from it, stuff I didn’t know.

      my thinking about babies might be correct

      also a breastfeeding baby is not vegan. it is taking what it needs from the mother’s body.
      there used to be a movement against breast feeding years ago, that has been largely debunked now

      However the doc featured did start going on about institutionalised racism, when it came to diet promotion
      seems the southern coloured races are lactose intolerant , while the northern white races are not, seems nobody quite understands that.

      monkeys, with whom we share a common ancestor, are omnivores, though not compulsively so like us.

      I admit to having missed the steroscipic vision thing on grasping branches—or even clutching at straws

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