The world economy is an amazingly complex, physics-based, self-organizing system. The three major elements are extracted resources including energy resources, human population, and demand coming through the financial system. Figure 1. Major elements of the world economy according to Gail Tverberg. These are human population, extracted resources including energy resources, and financial demand. All three of these elements tend to increase over time, but both population and extracted resources tend to hit limits because the world is finite. Financial demand is emphasized by politicians because i ..read more

It may be pleasant to think that the economies that are “on top” now will stay on top forever, but it is doubtful that this is the way the economy of the world works. Figure 1. Three-year average GDP growth rates for Advanced Economies based on data published by the World Bank, with a linear trend line. GDP growth is net of inflation. Figure 1 shows that, for the Advanced Economies viewed as a group (that is, members of the Organization for Economic Co-operation and Development (OECD)), GDP has been trending downward since the early 1960s; this is concerning. It makes it look as if within only ..read more

Moving industrialization offshore can look like a good idea at first. But as fossil fuel energy supplies deplete, this strategy works less well. Countries doing the mining and manufacturing may be less interested in trading. Also, the broken supply lines of 2020 and 2021 showed that transferring major industries offshore could lead to empty shelves in stores, plus unhappy customers. The United States started moving industry offshore in 1974 (Figure 1) in response to spiking oil prices in 1973-1974 (Figure 2). Figure 1. US industrial energy consumption per capita, divided among fossil fuels, bi ..read more

There are many myths about energy and the economy. In this post I explore the situation surrounding some of these myths. My analysis strongly suggests that the transition to a new Green Economy is not progressing as well as hoped. Green energy planners have missed the point that our physics-based economy favors low-cost producers. In fact, the US and EU may not be far from an economic downturn because subsidized green approaches are not truly low-cost. [1] The Chinese people have long believed that the safest place to store savings is in empty condominium apartments, but this approach is no lo ..read more

Historical data show that to date, a reduction in energy availability has mostly affected the US, European countries, Japan, and other advanced economies. I expect this situation to continue as energy limits become more of a problem. Advanced economies will start looking and acting more like today’s less-advanced economies. The world economy will face a bumpy path in a generally downward direction. In this post, I give an overview of our current predicament. All economies are subject to the laws of physics. We are biologically adapted to needing some cooked foods in our diets. We have also mov ..read more

In the US, companies that want to build liquefied natural gas (LNG) export terminals need to get advance approval for their plans from the US Department of Energy. There was a recent news item saying, “Biden pauses LNG export approvals under pressure from climate activists.” After looking into the situation, I 100% agree with Biden’s decision. There is no sense in the US adding more approvals for added LNG capacity at this time. This is the case, completely apart from climate considerations. When I looked into the situation, I found that the US already has a huge amount of LNG export capacity ..read more

It will be an interesting year. We know that the age of peak performance for humans varies, depending upon the activity. Peak performance for an athlete tends to come between ages 20 and 30, while peak performance for a person writing academic papers seems to come between ages 40 and 50 years. By the time people are 80 years old, they have a strong suspicion that health and other aspects of performance will deteriorate in the next 20 years. Economies, in physics terms, are similar to human beings. Both are dissipative structures. They require energy of the appropriate kinds to keep their ..read more

It is now popular to talk about leaving fossil fuels to prevent climate change. Pretty much the same result occurs if we run short of fossil fuels: We lose fossil fuels, but it is because we cannot extract them. Practically no one tells us about the extent to which the current system depends upon fossil fuels, however. The economy is extraordinarily dependent on fossil fuels. If there are not enough fossil fuels to go around, there is likely to be fighting over what is available. Some countries are likely to get far more than their fair share, while the rest of the world’s population will be l ..read more

Tailwinds often make jet planes fly faster than they would regularly fly. In this post, I talk about economic tailwinds that help the economy grow more quickly. Strangely enough, the economy seems to move from tailwind to tailwind, as new resources are discovered, as population expands, and as central banks figure out new ways to fix the economy. In this post, I will describe some tailwinds affecting the economy. Many of these have recently lost their value or are likely to lose their value in the future. The long-term trend seems to be toward tailwinds becoming available to some parts of the ..read more

Recently, I explained the key role played by diesel and jet fuel. In this post, I try to explain the energy bottleneck the world is facing because of an inadequate supply of these types of fuels, and the effects such a bottleneck may have. The world’s self-organizing economy tends to squeeze out what it considers non-essential parts when bottlenecks are hit. Strangely, it appears to me that some central governments may be squeezed out. Countries that are rich enough to have big pension programs for their citizens seem to be especially vulnerable to having their governments collapse. Figure 1 ..read more