Author Archives: Gail Tverberg

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.

Today’s Energy Crisis Is Very Different from the Energy Crisis of 2005

Back in 2005, the world economy was “humming along.” World growth in energy consumption per capita was rising at 2.3% per year in the 2001 to 2005 period. China had been added to the World Trade Organization in December 2001, … Continue reading

Posted in Energy policy, Financial Implications | Tagged , , , , | 3,147 Comments

Why financial approaches won’t fix the world’s economic problems this time

Time and time again, financial approaches have worked to fix economic problems. Raising interest rates has acted to slow the economy and lowering them has acted to speed up the economy. Governments overspending their incomes also acts to push the economy ahead; doing the reverse seems to slow economies down.

What could possibly go wrong? The issue is a physics problem. The economy doesn’t run simply on money and debt. It operates on resources of many kinds, including energy-related resources. As the population grows, the need for energy-related resources grows. The bottleneck that occurs is something that is hard to see in advance; it is an affordability bottleneck.

For a very long time, financial manipulations have been able to adjust affordability in a way that is optimal for most players. At some point, resources, especially energy resources, get stretched too thin, relative to the rising population and all the commitments that have been made, such as pension commitments. As a result, there is no way for the quantity of goods and services produced to grow sufficiently to match the promises that the financial system has made. This is the real bottleneck that the world economy reaches. Continue reading

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Ramping Up Renewables Can’t Provide Enough Heat Energy in Winter

We usually don’t think about the wonderful service fossil fuels provide in terms of being a store of heat energy for winter, the time when there is a greater need for heat energy. Figure 1 shows dramatically how, in the US, the residential usage of heating fuels spikes during the winter months. Solar energy is most abundantly available in the May-June-July period, making it a poor candidate for fixing the problem of the need for winter heat. Continue reading

Posted in Energy policy | Tagged , , , | 3,845 Comments

Why No Politician Is Willing to Tell Us the Real Energy Story

Politicians want to get re-elected. They want citizens to think that everything is OK. If there are problems, they need to be framed as being temporary, perhaps related to the war in Ukraine. Alternatively, any issue that arises will be discussed as if it can easily be fixed with new legislation and perhaps a little more debt.

Most high-level politicians are aware of the energy supply issue, but they cannot possibly talk about it. Instead, they choose to talk about what would happen if the economy were allowed to speed ahead without limits, and how bad the consequences of that might be. Continue reading

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The world’s self-organizing economy can be expected to act strangely, as energy supplies deplete

It is my view that when energy supply falls, it falls not because reserves “run out.” It falls because economies around the world cannot afford to purchase goods and services made with energy products and using energy products in their operation. It is really a price problem. . .

It is my expectation that these and other issues will lead to a very strangely behaving world economy in the months and years ahead. The world economy we know today is, in fact, a self-organizing system operating under the laws of physics. With less energy, it will start “coming apart.” World trade will increasingly falter. Fossil fuel prices will be volatile, but not necessarily very high.
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Posted in Financial Implications, oil shortages | Tagged , , | 4,063 Comments