No energy = no goods and services = no economy
The idea of an ‘industrial economy’ is an extremely recent human invention. And we’ve staked quite a lot on its continuation.
But it faces a massive predicament: It’s running out of resources.
When talking about the “economy”, we’re really referring to the flow of goods and services — which are themselves entirely dependent on energy. No energy = no goods and services = no economy. It’s really that simple.
So to track where we are in this story, put on your ‘energy goggles’. If you do, you can discover quite a lot.
Examples of our increasing use of energy to extract primary resources are all around you, if you know where to look. Most folks, though, willfully distract, if not delude, themselves with faith in our technological triumphs, so they remain blind to the evidence — even when it’s right in front of their faces.
One indication of increasing energy use is exemplified in the very recent practice of drilling 5-mile long oil wells into source rocks, then performing 100-stage frack jobs that consume up to 50 million pounds of sand and 16 million gallons of water (per job!). This is the essence of the shale oil revolution.
Some see it as a technological marvel; others, as a sign of severe desperation. The media will only ever dutifully tell you the technological marvel side of the story. And while it is a marvel, that’s only half the story.
More examples come to us from the world of hard rock mining. Where humans high-graded all the easy, nearby, high-yield ores during the first decades of the industrial revolution, the last few decades are clear examples of increasingly desperate efforts to go after the increasingly dilute residuals that remain.
Again, many of these new mining efforts are both testament to advancing technology and skills, as well as condemnation that the primary inputs for our economic machine are in increasingly short supply.
As mentioned, the media already does a fantastic job telling us about how wonderfully advanced all of these efforts are, so we’ll skip over that side of the story. Rather, this report will help you focus on understanding what these efforts actually represent in terms of where we are in the industrial story, which is really a tale of pursuing infinite exponential growth on a planet of finite resources.
We don’t do this to be stuck in the mud. But because every single stock and bond, as well as our entire collective economic future, is committed to the belief that economic limits will never appear, a reality-based counterpoint is badly needed. We think those limits to growth are already here, and are staring us right in the face once we know where and how to look for them.
If perpetual economic growth isn’t possible, then the entire construct of debt-based money will eventually implode. Pensions will not be serviced, and involuntary simplicity will visit economies and cultures alike.
And if our math is correct, it’s already too late to avoid these events. like Wile E. Coyote, all of our hopes and dreams are suspended in mid-air, now too far from the cliff’s edge to scrabble back to safety.
Keeping Your Eye On The Ball
The hard truth is that after just a few hundred years of intensive exponential economic growth fueled by the industrial revolution’s greatest achievement – unlocking fossil fuels to perform work for us – we are now scraping the bottom of the barrel.
As I noted in The Crash Course, additional resources are becoming harder to find and harder to get. They are more dilute, deeper and more distant. We quite predictably “high graded” the best resources decades (or centuries) ago, taking those that were easiest to get to, the most concentrated, and the most economic.
Once those were gone, we moved on to the harder-to-get to resources.
And now?
Now we’re at that awkward part of the story where rational people really ought to be asking some difficult questions besides Can we do this? Now we likely should also be asking Why are we doing this? And What is today’s scarcity tell us about tomorrow? And perhaps, Should we even be doing this?
Today’s textbook-perfect example of a project that really ought to provoke some serious inner questioning comes to us courtesy of the WSJ, reporting on the massive Rio Tinto project known as the Resolution Copper Project near Superior Arizona.
As you read this, please set aside the technical brilliance of what’s being proposed, and think instead about what such a project implies about Where we are in the story of perpetual economic growth. Are we closer to the beginning, the middle, or the end?
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