Financial Forecast for 2009, Considering Resource Limitations

…A big piece of the problem is that energy consumption in the US has not been growing very rapidly since 2000, and we know from the work of Robert Ayres and Benjamin Warr that there is a close tie between energy use, increase in energy efficiency, and economic growth.

Between 1985 and 2000, US energy consumption (all fuels combined) grew by an average of 1.7% per year; between 2000 and 2007, US energy consumption grew by an average of 0.4% per year. On a per capita basis, energy consumption was actually declining between 2000 and 2007. Energy consumption through September 2008 is down about 2% from 2007 (about 3% on a per capita basis).


Another part of the problem is that a larger and larger share of US energy consumption has been coming from imports (Figure 4), and the US has been becoming less and less able to pay for these imports, as evidenced by its ballooning balance of payment deficit. If the US had been able to import energy, use the energy to produce products that were worth a great deal more, and export those products, the US would not have had this problem.

It appears to me that the US is rapidly reaching “peak energy”, whether or not the world is reaching peak energy. What drives this peak is the economics of the situation–we are not producing enough goods and services with the fuels that we are importing to justify their continued importation. Also, even US produced natural gas from unconventional sources is becoming too expensive for the economy to afford. We have been in a type of overshoot in terms of buying more energy products than we really had funds for. The spike in prices for oil this summer helped force the issue. With the higher prices of oil and food, some people at the margin could no longer pay their mortgages, and the situation began to unwind.

The Oil Drum