Peak Oil is You
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Page added on October 12, 2012
Current IMF Growth Forecasts
The above is from the IMF’s recent World Economic Outlook and shows their projection for global economic growth over the next few years. They are currently projecting growth between 3 and 4% as the most likely case with some possibility of both higher and lower.
About eighteen months ago I took a look at then IMF projections – which at the time called for growth closer to 5% a year than 4% – and argued that they were too optimistic. I argued from the oil constraint – the projections implied a level of growth in oil supply that was unlikely to materialize. What we have seen in the interim is somewhat slower growth (especially in Europe, but also in the US and China) with stagnant global trade. Meanwhile oil supply has indeed been roughly flat, keeping prices persistently high, but the global economy is becoming steadily more oil efficient, allowing a certain amount of economic growth without a growing oil supply:
The data here are the IMF’s PPP GDP deflated with BEA estimates of GDP deflators and then BP oil production used to produce an estimate of gross world product per barrel of oil.
I think even the IMF’s now reduced forecast of 3-4% economic growth is likely to place considerable pressure on oil prices, but 2-3% world growth can probably be sustained at current prices just out of efficiency gains.
3 Comments on "Current IMF Growth Forecasts"
Newfie on Fri, 12th Oct 2012 6:07 pm
Never ending growth is a fairy tale.
Only children believe in fairy tales.
BillT on Sat, 13th Oct 2012 1:05 am
Does this mean that if Asia is still growing at 7+%, the West must be contracting by about 3%? That’s reasonable from the other statistics floating around. The West has had zero real growth or even negative growth (contraction) for years. Certainly since 2008 and probably since the 70s.
Earthprojects.info on Sat, 13th Oct 2012 2:51 pm
All we are talking about here is that we peaked in global oil production in 2005 and that peak is lasting about 10 years and we will start seeing a decline in production around 2015 when demand destruction will fully kick in. After two years of declining production many players will be out of the oil ballgame no longer demanding oil. The critical question is, will they be individual people who get killed by the economic tsunami this oil shock will unleash?
Demand destruction has already kicked in Post Peak on 2005. The way it is being framed by IEA is that consumers are reducing their demand by some unstated market forces, when in fact, it is the higher cost of oil caused by a peak (plateau) in production that has failed to keep pace with organic global growth demand, which has been destroyed.
Talk about living in denial.
The 10 year oil production peak-plateau has been a boon causing people to move away from oil (about 30 years too late), but how unexpected is the plateau? The peak oil bell curve is, after all, a bell curve, not a sharp spike. In that sense, we should have been expecting a gradual peak plateau exactly as it is happening. We are right on schedule with old MK Hubbert’s curve theory.
In any case, Core Laboratories, the experts, who the oil industry pay $1 billion a year to tell them how much oil is in 1100 of the 4000 fields under production worldwide, says that global production is going into decline around 2015. That is the most critical point of the peak in our view, as markets wake up to the reality of declining production and prices spike to around $400/barrel for 6 months or so.
Of course oil will be there, it will just be too costly for those who are poor and live hand-to-mouth. They might not be able to absorb the simultaneous spike in food prices. This is our #1 concern. We have a 72 day global food supply and we are facing a potential food crisis that could last over 180 days.
We want to see a global emergency food buffer of at least 180 days to insure food security for the most marginalized poorest sections of the global economy. Like around 50kgs of grains for every adult in distributed local areas.
Listen to Core Laboratories talk about their projection for declining global oil production by as early as 2015 in their report on the oil industry this August 2012 at Enercom in Denver, CO.
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