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.

Ramping up wind turbines, solar panels and electric vehicles can’t solve our energy problem

Many people believe that installing more wind turbines and solar panels and manufacturing more electric vehicles can solve our energy problem, but I don’t agree with them. These devices, plus the batteries, charging stations, transmission lines and many other structures necessary to make them work represent a high level of complexity.

A relatively low level of complexity, such as the complexity embodied in a new hydroelectric dam, can sometimes be used to solve energy problems, but we cannot expect ever-higher levels of complexity to always be achievable.

According to the anthropologist Joseph Tainter, in his well-known book, The Collapse of Complex Societies, there are diminishing returns to added complexity. In other words, the most beneficial innovations tend to be found first. Later innovations tend to be less helpful. Eventually the energy cost of added complexity becomes too high, relative to the benefit provided. Continue reading

Posted in Financial Implications | Tagged , , , , | 917 Comments

2023: Expect a financial crash followed by major energy-related changes

If the world economy experiences major financial turbulence in 2023, we could be in for a rough ride. In my opinion, a major financial crash seems likely. This is could upset the economy far more seriously than the 2008 crash.

I am certain that some mitigation measures can be implemented. For example, there can be a major push toward trying to make everything that we have today last longer. Materials can be salvaged from structures that are no longer used. And some types of local production can be ramped up.

We can keep our fingers crossed that I am wrong but, with less oil and other energy resources available per person, moving goods shorter distances makes sense. Thus, the initial trends we are seeing toward regionalization are likely to continue. The move away from the US dollar as the reserve currency also looks likely to continue. Moreover, if the changes I am talking about don’t occur in 2023, they are likely to begin in 2024 or 2025. Continue reading

Posted in Financial Implications, Oil and Its Future | Tagged , , , | 3,753 Comments

The economy is moving from a tailwind pushing it along to a headwind holding it back

When the Crisis Stage occurs, there are fewer goods and service per capita to go around, so some members of the world economy must come out behind. Conflict of all kinds becomes more likely. Political leaders, if they happen to discover the predicament the world economy is in, have little interest in making the predicament known to voters, since doing so would likely lead them to lose the next election.

Instead, the way the physics-based self-organizing economic system works is that alternative narratives that frame the situation in a less frightening way gain popularity. Political leaders may not even be aware of how dependent today’s economy is on fossil fuels. Researchers may not be aware that their “scientific” models are misleading because they look at too small a portion of the overall system and make unwarranted assumptions. Continue reading

Posted in Alternatives to Oil, Energy policy, Financial Implications | Tagged , , , , | 3,874 Comments

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

Posted in Energy policy, Financial Implications, News Related Post, oil shortages | Tagged , , , | 3,503 Comments