The world is in a second mini-recession/stall since the Great Recession began in 2008. As in 2010, we’ve seen oil prices ramp up and growth peter out. Now, because growth/oil demand is down, oil prices have dropped back a little. But the moment the economy shows mild signs of life, they’ll be back up again. Short periods of weak growth, oil price shocks, recessions – sounds like the cycle peak oil economists have predicted for years.
And before anyone says ‘well, we’ll just frack our way out of this problem’ or ‘electric cars to the rescue’ understand this: those are expensive energy sources (and also limited in their scalability). The problem we’re facing is not that we’re running out of energy but that we’re running out of energy that is cheap enough to burn and maintain the superstructure of our economy. Put another way, the ‘cost’ of an energy source is the energy that needs to be expended in accessing it – as we replace exhausted easy energy sources with ones that use a higher percentage of their energy potential to be accessed, the amount left for ‘everything else’, the economy, shrinks.
Only rising energy use efficiency or, more accurately, the fact there are so many low-hanging fruit of extravagant, low-value energy use that can be cut is allowing some moderate growth in the space between oil price shocks.
This isn’t an apocalypse, like that dinosaur John Armstrong, said yesterday. It’s a new challenge and it requires a new outlook that doesn’t assume growth is natural, inevitable, and the be all and end all of our society.