Link: http://gregor.us/policy/limits-to-keynesianism/Every once in awhile, I need to remind myself that The Downward Spiral is intended, first and foremost, to be a Peak Oil blog. Sometimes, I get so wrapped up in crabbing about politics, government, the media and related stupidity that the Peak Oil issue tends to fade into the background.
So today, I'm rectifying the situation by posting the above chart from the excellent Gregor.us blog showing the world's oil production for this past decade (mbpd stands for Millions of Barrels Produced Per Day). As you can see, oil production peaked in 2005 and has essentially been flat ever since. If you want to know why the governments of the OECD countries have been so desperately trying to pump up their economies with massive amounts of borrowing in recent years, look no further than the above. It also demonstrates exactly why they will fail, as debts cannot be serviced if the economy does not grow, and the economy will not grow unless the supply of available energy grows. It really is just that simple.
At this point it remains uncertain as to how long the world will continue to bump along this oil production plateau before finally entering terminal decline. A number of of the most knowledgeable analysts, including Tom Whipple, have estimated that it will occur beginning in 2014. If so, we will likely experience the continuation of "extend and pretend" by OECD governments for a few more years before the shit really starts to hit the fan.
Prepare accordingly.
I'm certainly not trying to debunk PO here, I've been clued in ever since I read an essay by Kunstler on Alternet back in 2005. I have to point out, however, that the numbers on that chart for 2010 and 2011 are both larger than 2005. Were they later revised? What's up?
ReplyDeleteKeep up the excellent writing. It gives me something good to read every morning with breakfast.
@Mike Lorenz - first of all, thanks for the compliment!
ReplyDeleteAs to the numbers for the last two years being larger than 2005, they are indeed, but by such an infinitesimal amount as to be statistically negligible. The mini-crash from 08-09 was caused by the plunge in world oil prices from the $140s a barrel to the mid $30s after the world wide financial crash, but the resumption in oil price increases back over $100 (for most crude oil around the world) has not caused supplies to rise more than a very tiny percentage above their previous highs.
Also, the period from 02-05 was a time of rapid economic growth, spurred in part by the housing bubble in the U.S. and other OECD countries. In order to see that kind of growth again, which is what the policymakers really want, we'd have to see that kind of an increase in oil production. The fact that it isn't happening despite all of their attempts to pump up the economy is telling.