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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1,045 Responses to 2021: More troubles likely

  1. Harry McGibbs says:

    “Debt at China’s state-owned firms in spotlight as credit tightening raises default pressure:

    “Chinese state firms defaulted on 71.8 billion yuan (US$11.1 billion) worth of debt in 2020 – the largest total since China allowed defaults in 2014

    “Analysts say any defaults of weak state-owned enterprises would be highly contagious and impact the entire credit market.”


  2. Harry McGibbs says:

    “Latin America is the world’s worst-hit region by the coronavirus pandemic and its economy faces a slow and painful recovery, with a growing risk that worsening poverty and inequality will trigger political upheaval, economists have warned.”


    • Harry McGibbs says:

      “For more than 60 years, Cuba supplied at least some rice, milk, beans, sugar, chicken, electrical power and even cigarettes to its people nearly free of cost regardless of whether they worked, allowing many to survive without a job or depend solely on remittances.

      “But this year, the government is implementing a deep financial reform that reduces subsidies…”


      • which explains why UBI can never work

        • Exactly what I was thinking.

          Without enough energy, the increased productivity and higher standard of living for those who are working will be a problem as well. There likely won’t be enough jobs to go around.

        • Cubans skillfully stretched their embargo cage and essentially de-growth period for decades, now on their down sloping staircase trajectory bumped into serious hard wall thresholds likely impossible to alleviate..

          This has [very little] common with UBI as presented recently in western circles aka not showing up, contributing nothing, earning pocket change money for staying put, buying trinkets and junk food..

    • Large part of Latin America’s pop:

      – lot of booze & smoking and lack of proper sleep habits, nutrient / vit deficient diet yet inclination towards obesity, ..

      This could be a factor or not.

  3. Harry McGibbs says:

    “Shocks to supply chains are engulfing a wider swath of the global economy as the pandemic rages on, threatening to stifle Asia’s trade-led recovery just as soaring freight rates make it harder for businesses to weather another year like 2020.”


  4. Harry McGibbs says:

    “The energy crisis that has hit Asia in 2020/21 exhibits many of the characteristics of crises that hit Britain in 1946/47 and the United States in 1973/74.

    “The common thread in all three is that abnormal weather or a supply disruption aggravated an underlying energy shortage and brought the crisis to a head; signs of a crisis had been evident months earlier but were not acted upon with sufficient urgency.”


    • This sounds like a standard problem. A similar problem occurs with both oil and electricity.

      Hurricanes in the Gulf have brought gasoline supply problems to Atlanta more than once. We are far enough away from Gulf supplies and imported gasoline from Europe that there were a few days when gas stations ran out. If they had been allowed to charge higher prices, they likely wouldn’t have run out. Local officials made a big show of saying, “No price gouging.”

  5. Harry McGibbs says:

    “Europe’s oil demand is off to a sluggish start to the year as restrictions on movement limit the consumption of road fuels.

    “Road use in the U.K., France, Italy and Spain was down 37% last week compared with pre-virus levels…”


    • Harry McGibbs says:

      “It may be counterintuitive to say that the oil demand crash and the resulting glut in 2020 could lead to an oil supply crunch in just a few years.

      Yet, a growing number of experts and international agencies warn that the world could be headed for an oil shortage when oil demand finally recovers…

      “Last year, the pandemic slashed global oil demand… But the coronavirus also accelerated a structural decline in upstream oil investments…

      “Investments in new oil supply have never been able to achieve the highs seen in 2014, just before the previous oil crisis of 2015-2016 pushed the oil industry to reassess the way it spends on big projects.

      “But 2020 investments hit a new low.”


      • MM says:

        Don’t worry, there will not be a recovery what so ever because a recovery
        1. needs growing energy supply (Gail) in the first place what is gone since 2 years
        2. will require an end to lockdown, what is not in the crads as we will go to North Korea for all.
        Except there will be some fuel left if you show up with a Porsche at the gas station (ahem, if you will make it there through all the “pedestrians”…)

    • This sound terrible for world oil supply, whatever the price.

    • Xabier says:

      Curiously, though, at least in the UK, air pollution originating from road traffic is now extremely high, higher in fact than 3 years ago.

      It has been suggested that this might be caused by all the diesel vans and trucks delivering goods ordered online.

      This will certainly result in many tens of thousands of extra deaths – in the UK it was estimated to be running at 25k or so per annum.

      Lock-downs, the gifts that keep on giving.

  6. Harry McGibbs says:

    “Achieving herd immunity and bringing the coronavirus in check won’t resolve all of the pandemic’s economic damage, Carmen Reinhart, chief economist at the World Bank, said Tuesday.

    “What began as a health crisis is creating “your classic balance sheet problems” and risks plunging the world into a dire financial crisis, Reinhart said…”


    • I think one of the big issues is:

      “Financial institutions across the globe in varying degrees have also agreed to grace periods. Periods in which businesses and households don’t repay their debts. What happens when those programs come to an end?” the economist said.

      • Minority Of One says:

        >>What happens when those programs come to an end?

        Lockdown Lebanon-style. Or a techno-fascist/communist state a-al-China where you do as you are told or else.

    • Xabier says:

      A dire financial crisis which will, of course, surprise all of those in government who enacted policies which could only have brought it about. ….

  7. that the don is refusing to pay Guiliani brings on a deep black humour that is beyond parody

    • https://www.cnn.com/2021/01/13/politics/donald-trump-rudy-giuliani-legal-fees-white-house/index.html

      Trump has told staff not to pay Rudy Giuliani over irritation at being impeached again

      The President is now more isolated than ever. Several of his Cabinet secretaries — the ones who haven’t resigned in protest — are avoiding him, his relationship with the vice president remains fractured and several of his senior staffers are scheduled to depart their posts this week.

      When there is not enough energy to go around, strange things seem to happen. Way too much discord. Hard to keep groups together.

    • Lidia17 says:

      CNN? Likely to be Fake News..
      Trump is either a.) weak, b.) not weak, or c.) not weak but wanting to appear weak.
      I can’t imagine that he (nor many members of the military/intelligence) are just going to let Biden/China waltz in without opposition.

      I have a feeling Trump was indeed recruited to be where he is now, and that these machinations have been playing out for decades.

      “In politics, nothing happens by accident. If it happens, you can bet it was planned that way.” —Franklin D. Roosevelt

  8. JoJo says:

    I see the probability for false flags very very high. Possibly even Bidens assassination. Bidens assassination gives them everything they want. Kamala is president and the population can be terrorized with impunity.

    Needless to say I am advocating staying home and keeping compassion and light in our hearts. Beauty has not been stolen from the world. They cant steal that and they cant steal our hearts. Choosing beauty and light as creatures of this world is infinitely powerful. Their acts, the election fraud, censorship are acts of desperation. We are certainly in for some different times ahead but these times are only difficult in terms of the false narratives and images dissolving from lack of substance. When things of no substance dissolve it is only disconcerting because you believed they had substance. Keep light in your heart. Keep compassion in your heart. Know that you are beautiful.

    • Azure Kingfisher says:

      The script writers have multiple avenues for removing Biden from the stage:

      1. Fake death due to natural causes/old age or COVID-19.
      2. Removal from office under the 25th Amendment.
      3. Fake death due to assassination carried out by political enemies.

      In each case, Harris becomes president. However, a scripted fake assassination results in no real injuries/deaths, enables a Harris presidency, unifies the Democratic base against the Republican base while further traumatizing and polarizing the country at large, and provides the catalyst for increasingly draconian response measures against the citizenry who are now considered “potential terrorists.” Throw in a major Democratic-led witch hunt and purging of Congress to shore up power, possibly carried out by AOC and her “Squad” of blacklist makers.

      From, “Biden Says Rioters Who Stormed Capitol Were Domestic Terrorists”

      “Mr. Biden has said he plans to make a priority of passing a law against domestic terrorism, and he has been urged to create a White House post overseeing the fight against ideologically inspired violent extremists and increasing funding to combat them.”


      The “War on Terror” is coming home.

      • JoJo says:

        “The “War on Terror” is coming home.”

        practice makes perfect

      • Rodster says:

        Gotta love politicians who encourage or create a crisis then offer to help restore more order via mass surveillance, tyranny and top down control.

      • JMS says:

        “The “War on Terror” is coming home.”

        And all began twenty years ago, with Sept.11 and Patriot Act.

        As a movie buff I would say the “War on Terror” script was utter garbage. And its sequel “War on Virus” is even worst I’m affraid, it has no head nor tail. In any case, when you own all the theaters in town, that doesn’t matter at all. People need to be fed stories and “meaning” and aren’t really choosy. The virus movie is the talk of the town for a year now. And that’s what counts for the producers. 🙂

  9. Pingback: Roger Baker : TRANSPORTATION | Is widening I-35 Austin’s biggest boondoggle ever? | The Rag Blog

  10. roc says:

    Merci Monsieur le Président

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