2021: More Troubles Likely

Most people expect that the economy of 2021 will be an improvement from 2020. I don’t think so. Perhaps COVID-19 will be somewhat better, but other aspects of the economy will likely be worse.

Back in November 2020, I showed a chart illustrating the path that energy consumption seems to be on. The sharp downturn in energy consumption occurs partly because the cost of oil, gas, and coal production tends to rise since the portion that is least expensive to extract and ship tends to be removed first.

At the same time, prices that energy producers are able to charge their customers don’t rise enough to compensate for their higher costs. Ultimate customers are ordinary wage earners, and their wages are not escalating as rapidly as fossil fuel production and delivery costs. It is the low selling price of fossil fuels, relative to the rising cost of production, that causes a collapse in the production of fossil fuels. This is the crisis we are now facing.

Figure 1. An estimate by Gail Tverberg of World Energy Consumption from 1820 to 2050. Amounts for earliest years based on estimates in Vaclav Smil’s book Energy Transitions: History, Requirements and Prospects and BP’s 2020 Statistical Review of World Energy for the years 1965 to 2019. Energy consumption for 2020 is estimated to be 5% below that for 2019. Energy for years after 2020 is assumed to fall by 6.6% per year so that the amount reaches a level similar to renewables only by 2050. Amounts shown include more use of local energy products (wood and animal dung) than BP includes.

With lower energy consumption, many things tend to go wrong at once: The rich get richer while the poor get poorer. Protests and uprisings become more common. The poorer citizens and those already in poor health become more vulnerable to communicable diseases. Governments feel a need to control their populations, partly to keep down protests and partly to prevent the further spread of disease.

If we look at the situation shown on Figure 1 on a per capita basis, the graph doesn’t look quite as steep, because lower energy consumption tends to bring down population. This reduction in population can come from many different causes, including illnesses, fewer babies born, less access to medical care, inadequate clean water, and starvation.

Figure 2. Amounts shown in Figure 1, divided by population estimates by Angus Maddison for earliest years and by 2019 United Nations population estimates for years to 2020. Future population estimated to be falling half as quickly as energy supply is falling in Figure 1. World population drops to 2.8 billion by 2050.

What Is Ahead for 2021?

In many ways, it is good that we really don’t know what is ahead for 2021. All aspects of GDP production require energy consumption. A huge drop in energy consumption is likely to mean disruption in the world economy of varying types for many years to come. If the situation is likely to be bad, many of us don’t really want to know how bad.

We know that many civilizations have had the same problem that the world does today. It usually goes by the name “Collapse” or “Overshoot and Collapse.” The problem is that the population becomes too large for the resource base. At the same time, available resources may degrade (soils erode or lose fertility, mines deplete, fossil fuels become harder to extract). Eventually, the economy becomes so weakened that any minor disturbance – attack from an outside army, or shift in weather patterns, or communicable disease that raises the death rate a bit – threatens to bring down the whole system. I see our current economic problem as much more of an energy problem than a COVID-19 problem.

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Katy Lin 5 days ago Member's comment

I miss 2019.