Category Archives: Energy policy

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

Posted on October 18, 2022 by Gail Tverberg

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

Posted on September 20, 2022 by Gail Tverberg

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 →

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

Posted on August 23, 2022 by Gail Tverberg

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 →

Posted in Energy policy, Financial Implications | Tagged , , | 4,427 Comments

Why raising interest rates to reduce inflation may work out very badly

Posted on July 5, 2022 by Gail Tverberg

Are we headed for very high energy prices? Or, are we headed for a financial system that starts falling apart? The whole economic system may change remarkably. For example, what many people thought was money, or a promised pension plan, may not really be there when the time comes to get value from it. Shelves in stores may be empty when it comes time to make a purchase. Continue reading →

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Is the debt bubble supporting the world economy in danger of collapsing?

Posted on May 17, 2022 by Gail Tverberg

With an ever-lower cost of debt, the economy has had a hidden tailwind pushing it long between 1981 to 2020. Now that interest rates are again rising, the danger is that a substantial portion of this debt bubble may collapse. My concern is that the economy may be headed for an incredibly hard landing because of the inter-relationship between interest rates and energy prices (Figure 2), and the important role energy plays in powering the economy. Continue reading →

Posted in Energy policy, Financial Implications | Tagged , , | 4,216 Comments