Articles by: Gail Tverberg

2017: The Year When The World Economy Starts Coming Apart

2017: The Year When The World Economy Starts Coming Apart

Some people would argue that 2016 was the year that the world economy started to come apart, with the passage of Brexit and the election of Donald Trump. Whether or not the “coming apart” process started in 2016, in my opinion we are going to see many more steps in this direction in 2017. Let me explain a few of[Read More…]

What Has Gone Wrong With Oil Prices, Debt, And GDP Growth?

What Has Gone Wrong With Oil Prices, Debt, And GDP Growth?

Our economy is a mystery to almost everyone, including economists. Let me explain the way I see the situation: (1) The big thing that pulls the economy forward is the time-shifting nature of debt and debt-like instruments. If we want any kind of specialization, we need some sort of long-term obligation that will make that specialization worthwhile. If one hunter-gatherer[Read More…]

by Comments are Disabled Resource Crisis
Why Energy Prices Are Ultimately Headed Lower; What The IMF Missed

Why Energy Prices Are Ultimately Headed Lower; What The IMF Missed

We have been hearing a great deal about IMF concerns recently, after the release of itsOctober 2016 World Economic Outlook and its Annual Meeting October 7-9. The concerns mentioned include the following: Too much growth in debt, with China particularly mentioned as a problem World economic growth seems to have slowed on a long-term basis Central bank intervention required to produce[Read More…]

What Really Causes Falling Productivity Growth:An Energy-Based Explanation

What Really Causes Falling Productivity Growth:An Energy-Based Explanation

What really causes falling productivity growth? The answer seems to be very much energy-related. Human labor by itself does not cause productivity growth. It is human labor, leveraged by various tools, that leads to productivity growth. These tools are made using energy, and they often use energy to operate. A decrease in energy consumption by the business sector can be[Read More…]

An Updated Version Of The “Peak Oil” Story

An Updated Version Of The “Peak Oil” Story

The Peak Oil story got some things right. Back in 1998, Colin Campbell and Jean Laherrère wrote an article published in Scientific American called, “The End of Cheap Oil.” In it they said: Our analysis of the discovery and production of oil fields around the world suggests that within the next decade, the supply of conventional oil will be unable to keep[Read More…]

Overly Simple Energy-Economy Models Give Misleading Answers

Overly Simple Energy-Economy Models Give Misleading Answers

Does it make a difference if our models of energy and the economy are overly simple? I would argue that it depends on what we plan to use the models for. If all we want to do is determine approximately how many years in the future energy supplies will turn down, then a simple model is perfectly sufficient. But if[Read More…]

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Energy Limits: Why We See Rising Wealth Disparity And Low Prices

Energy Limits: Why We See Rising Wealth Disparity And Low Prices

Prices of oil, coal, and natural gas tend to rise and fall together–just as we would expect, if they are all responding to the same changes in debt levels, and indirectly, the same changes in world economic growth rates. If energy prices are based on debt levels, our concern should be that all fossil fuels will peak within a few years of each other. The cause of the peak will be low prices, not “running out” of energy products

A labourer searches for usable coal at a cinder dump site on the outskirts of Changzhi, Shanxi province October 27, 2009. Spot thermal coal prices in China's top coal shipping port Qinhuangdao continued to rise this week to their highest levels in about 11 months, and the strength is likely to remain as demand grows, traders and analysts said on Tuesday. REUTERS/Stringer  (CHINA ENERGY BUSINESS) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA

China: Is Peak Coal Part Of Its Problem?

The world’s coal resources are clearly huge. How could China, or the world in total, reach peak coal in a timeframe that makes a difference? If we look at China’s coal production and consumption in BP’s 2016 Statistical Review of World Energy (SRWE), this is what we see: Figure 1. China’s production and consumption of coal based on BP 2016 SRWE. Figure 2[Read More…]

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$50 Oil Doesn’t Work

$50 Oil Doesn’t Work

$50 per barrel oil is clearly less impossible to live with than $30 per barrel oil, because most businesses cannot make a profit with $30 per barrel oil. But is $50 per barrel oil helpful? I would argue that it really is not. When oil was over $100 per barrel, human beings in many countries were getting the benefit of[Read More…]

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The Real Oil Limits Story; What Other Researchers Missed

The Real Oil Limits Story; What Other Researchers Missed

For a long time, a common assumption has been that the world will eventually “run out” of oil and other non-renewable resources. Instead, we seem to be running into surpluses and low prices. What is going on that was missed by M. King Hubbert, Harold Hotelling, and by the popular understanding of supply and demand? The underlying assumption in these[Read More…]

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The Physics Of Energy And The Economy

The Physics Of Energy And The Economy

I approach the subject of the physics of energy and the economy with some trepidation. An economy seems to be a dissipative system, but what does this really mean? There are not many people who understand dissipative systems, and very few who understand how an economy operates. The combination leads to an awfully lot of false beliefs about the energy[Read More…]

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Why “Supply And Demand” Doesn’t Work For Oil

Why “Supply And Demand” Doesn’t Work For Oil

The traditional understanding of supply and demand works in some limited cases–will a manufacturer make red dresses or blue dresses? The manufacturer’s choice doesn’t make much difference to the economic system as a whole, except perhaps in the amount of red and blue dye sold, so it is easy to accommodate. Figure 1. From Wikipedia: The price P of a[Read More…]

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How Our Energy Problem Leads To A Debt Collapse Problem

How Our Energy Problem Leads To A Debt Collapse Problem

Usually, we don’t stop to think about how the whole economy works together. A major reason is that we have been lacking data to see long-term relationships. In this post, I show some longer-term time series relating to energy growth, GDP growth, and debt growth–going back to 1820 in some cases–that help us understand our situation better. When examining these[Read More…]

by Comments are Disabled Globalisation, Resource Crisis
Oil And The Economy: Where Are We Headed In 2015-16?

Oil And The Economy: Where Are We Headed In 2015-16?

The price of oil is down. How should we expect the economy to perform in 2015 and 2016? Newspapers in the United States seem to emphasize the positive aspects of the drop in prices. I have written Ten Reasons Why High Oil Prices are a Problem. If our only problem were high oil prices, then low oil prices would seem to[Read More…]

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