None of this has really sunk in with the talking heads on TV. Having failed to predict the current financial crisis (which may have been triggered by high fuel prices) they now assure is it was all a temporary glitch and that service will be soon back to normal. Nobody seems to want to hear that it will get worse. While Australia has lots of coal, gas and uranium the rest of the world (with growing population) will insist on taking lots of it. However we don't have enough oil, cheap phosphate or reliable water in southern rivers. Desalination and electric transport will also increase energy demand at the same time time we are being urged to conserve. The need for sustainability must now enter into everything from migration policy to water use and power generation. The budget depleting stimulus handouts will look like an error in hindsight.

What can I say? Awesome article. Macro economists have a lot to answer for.

Okay, I'll say it. The author's thesis, as outlined in the article, is highly confused.
This article seems to be another effort to argue that there is a looming shortage of oil for our energy needs. Another article about peak oil in other words, and I am weary of articles on peak oil. The interplay between supply, demand, price, development, exploration, technology and product substitution in the oil industry is highly complex. Probably the key factor, however, is price, and that is very low at the moment. You think it may go much higher later? Invest in oil futures, and go bankrupt. You will find that oil prices will never behave as expected.
As for the stuff on money supply, most of the stiumulus efforts of late have been straight pump priming and nothing to do with monetarianism, which nobody pays much attention to these days.

Curmudgeonathome,

Are you saying we don't have a looming energy crisis? Based on current rates of consumption we will have used up most of the trillion or so barrels of oil left in about 30 years. I don't see much of a push to build more wind/solar/gas/coal/nuclear/wave power stations anywhere in Australia. What is going to replace all that oil

I don't think we have yet found a way to use nuclear or renewable energy for either agriculture (which has been described as the process of converting oil into food) or mass transport. Very interesting article - thank you. I'm glad I won't be around in 50 years time: I think it will be tough.

Hmmm... my kids will be around in 50 years. I'd like to leave them something better then "sorry we used all the good stuff. Good luck and all that."

Charger: "What is going to replace all that oil."

Actually Charger, in the short term probably LPG, and in the slightly longer term coal and natural gas shoved through the Fischer-Tropsch process. But they will run out by the end of the century.

When they we appear to have 4 choices:

1. Invent cheap way to storage large amounts of energy (say the nations consumption for a week) - via batteries, dams, or whatever.

2. Get some sort of sustainable nuclear process to work - be it Uranium from the sea, breeder reactors, nuclear fusion, thorium reactors.

3. Get a workable biofuel solution that doesn't chew huge amounts of arable land, water and fertiliser. Maybe algae.

4. Die like flies.

I didn't put energy production in that list because it looks like a solved problem. As Michael graph shows we have lots of ways of collecting energy - solar, wind and others coming along, we just can't store it until it is needed.

An optimist will probably think we can scrape through with energy. Solving energy won't be enough to prevent us from dying like flies though. If we continue like we are we will run out of phosphorus this century, and that will have the same effect. Food production drops by a factor of 10 without phosphorus. Maybe we can recycle our sewage to get out of that one.

But even if we solve all those problems, we are on track to him 100 million in Australia by 2100. That might be sustainable. We produce 4 times the amount of food we consume right now - enough for 80 million. If we stop trading food for cars, TV's and stuff we might survive. But it will get getting crowded around here. At current rates the Philippines will hit 0.5 billion, Indonesia 0.6 billion, China 2.3 billion, India 4.3 billion, none of which is sustainable. They will all start dying like flies long before 2100.

The 21st century sure is going to be a wild ride.

An excellent article, and here is an addition to Lardelli' article.

Most renewable energies yield electric energy, which is not practical in powering tractors, combines, long distance trucks, airplanes, ships, and most freight trains. The development of these renewables uses much liquid fuel and yields electric energy, which in not useful. And why develop more electric energy as factories, commercial center, and offices close and require less electric power?

Renewable energy is an elusive butterfly, as it is manufactured, transported, and maintained on fossil energy, which will soon become prohibitively expensive. When the power grid goes out, electric energy will not be available, except locally, until spare parts for the system are not available.

By chasing elusive butterflies, we don't see that we are running off a cliff.

We are in the quicksand period of the oil age.

We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, irrigation, water supply and waste water treatment, pumping of gasoline and diesel, airports, communications, and automated systems.

It is time to face the music, and prepare for Peak Oil impacts.

Best regards,

Cliff Wirth

Clifford J. Wirth, Ph.D.
http://survivingpeakoil.blogspot.com/
http://www.peakoilassociates.com/POAnalysis.html

Sorry fellas but you are still short of an energy crisis. I was told only 30 years or oil left, 30 years ago (yes, I'm that old). The current reserves quoted by other commentators - as in we'll run out at the present rate of consumption in 30 years - have nothing to do with total exploitable reserves. That often-quoted published reserve figure varies according to price, but with a lag. Trying to tie down a definite period when the major reservoirs with easy-lift (cheap) oil will seriously start to run dry is tough enough - and no, it hasn't happened yet, although some commentators have claimed otherwise. Trying to predict when, say, the recently unlocked Canadian oil sands reserves may start to run out is impossible. Then there is LNG, shale oil and even coal, which can be converted to oil if needs be (although, admittedly, the price has to be right) - and coal is plentiful indeed (again, forget the published reserve figure it has nothing to do with total exploitable reserves). If you are waiting for the end of petroleum and the rise of electric cars you are in for a long wait. The author's thesis is best ignored.

Human beings are thermodynamic machines subject to the Second Law of Thermodynamics.

That means if you reduce their use of energy, you reduce their internal order and they tend faster to thermodynamic equilibrium or death.

There are only two ways to prevent this:

* Invest in GEOTHERMAL Hot Dry Rock technologies

* Stabilise global population numbers to 6 billion and quit the childishness of the eternal economic (ie population) growth on a finite planet mantra.

Using less energy so rich folk can take up the energy slack to grow THEIR economies is a FOOLS game. In very short order Chaos will engulf not only the dopey energy conserving Do-Gooders but the Golden-parachuting, Congress-lobbying, Neo-American-Aristocracy as well.

Rich people telling average Australians to conserve Energy is like Marie Antoinette saying "Let them eat cake".

Assuming the second law of thermodynamics only applies to non-living systems is at best wishful thinking and at worst it is dead ignorance.

Excellent article.
Perhaps by repeating this argument, and going slowly for the ones used to thinking "economics" they will eventually get it.
curmudgeonathome: It is not that oil will run out, it is just that it will become more expensive to extract and utilise. Go back and look at the cliff graph. Sure there will be oil, but you will have the US bombing people for it, the bankers making "profits" financing it, the Halibertons of the world corrupting politics to get it...etc.
Just like the banking parasites, these oil parasites will bring the system to the point where the "host" economy (people actually using oil for human needs) cannot bear the strain. Please read the "crash course" by Chris Martinson.
cjwirth: You will be somewhat surprised what can happen when investment is targeted and feasable technologies are funded.
Lithium battery, thermal storage, even Aluminium...there are *lots* of ways that are actually *technically* feasable to store and transport renewables.
Fact is, renewables are more likely to lead to distributed energy systems, which means that households will not be subsidising big business as they do now. *That* is the main reason for the anti-renewable FUD in newspapers, blogs, etc. Not to mention the OBP factor...There are too many "orange bellied parrots" being thrown up at the moment for distributed renewable tech to reach economy of scale, but they are not unfeasable when the world wants to get them.
Renewables are *not* "elusive butterflies".
Checkout the economics of desert hot salt solar thermal as compared to Coal...make sure you include government subsidies to coal, transport, mining, coal related illness, co2...

Rstuart, I think the die like flies option is on the cards -- at least for some of us.

Curmudgeonathome, Just because we haven't had the energy crisis yet doesn't mean its on is way. America's oil production peaked in 191 (or 72) about a year or so after Hubbert predicted it would. World supply may be harder to predict (e.g the Saudi's aren't telling anyone how much they think is left)but a peak in 2005 seems to have happened. Supply and demand changes with extend or decrease the length of time we have left to do something.

I think your right, we're not going to see a mass of electric cars anytime soon (or at all) but this does not disprove the author's thesis. Ultimately we exchange energy, money is just the medium of transfer. When our energy supply contracts then our money supply will also (unless you want to print more but we all know where that leads to) and ditto our economies in their present form.

Curmudgeon: "Sorry fellas but you are still short of an energy crisis."

Well Curmudgeon, if you know how to use google, dig up for me a link to any large OECD government funded body that says we won't. That way someone might take you seriously. Right now you sound like an old man describing the world in his youth. It doesn't sound particularly relevant to us youngin's.

Charger: "I think the die like flies option is on the cards -- at least for some of us."

It depends who "us" is Charger. Populations in the world have been dying like flies every time a drought hits for as long as I can remember. It has always happened, and will continue to happen. Since time immemorial humans have over populated in the good times and died like files in the bad times. This century things will be a little different for we Aussies as it looks almost certainly it will start happening in our near neighbours - as opposed to 1/2 way around the globe.

It doesn't necessarily have to happen us though. To me it looks like we could avoid it, this century anyway, if we decided we wanted to. We are one of the few countries that have that option. Of course dying flies is also the option we are implicitly choosing if we continue let our population grow and in general ignore the problem. But right now, we get to choose what fate we suffer towards the end of the century.

"We've been running out of oil ever since I was a boy." - Prof. Frank Notestein.

Ah, the Looming Energy Crisis; it's the security blanket of the Malthusians. Every time the real world proves their pet theories wrong, the pull out the Looming Energy Crisis to have a bit of a suck on and get their fix of misery.

And they can always be relied on to point to a short-term downwards trend as "proof" that they are, at long last about to be proved right.

Stick around, guys, the Great Prophet Zarquon is coming back eventually, too.

"More people, and increased income, cause resources to become more scarce in the short run. Heightened scarcity causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail in the search, at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices eventually become lower than before the increased scarcity occurred." — Julian Simon

"The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil" — Sheikh Zaki Yamani

This article ties in very nicely with Chris Martenson's website over at ChrisMartenson.com. In his Crash Course he discusses this very problem together with the other looming crises of exponential debt and environmental limitations.

rstuart, Anyone who doesn't have access to water (and a means to move it round), arable land, has a large population and lack of energy (be it horses or tractors) is likely to die like flies. That would seem to be be large parts of Africa, China, India and maybe Japan. Although it could be anywhere. e.g How many weeks food supply do you have a home? How much food is in your supermarket? Do you even grow your own food?

Clownfish, yes there is a bit of doom and gloom but that still doesn't make it what's being said wrong. The author's article is correct. No more energy no more economic expansion. At current usage the world oil supply will last about 30 more years (a short history of the future, surviving the 2030 spike, sorry can't remember who wrote that one). If we want to avoid this then we'd best be starting now. We're not. I haven't heard of any plans to be build more power stations for the (presumed) electric cars or any suggestion of what to replace oil with other then more fossil fuels (i.e. natural gas).

If the economy is to grow (is that entirely such a good thing) it will need more energy. Most of which we have now is running out with no practical replacement in sight.