Are We Living in a Time of Collapse?

We have seen an extraordinary increase in economic activity since the dawn of the industrial era in the Middle Ages. This growth has been exponential, as is evidenced by looking at World GDP over the last 500 years:

This dramatic rise would not have been possible without fossil fuels. Our ability to make ‘stuff’ and to provide services such as healthcare and education is entirely dependent on energy. We can see this clearly from the corresponding graph on world energy consumption. After relying on biomass (mostly wood) for millennia, it was the transition to coal and then oil and gas that enabled exponential growth. 

Looking at both graphs it does not seem likely that growth is going into reverse any time soon, but taking a much closer look at the last 30 years of world energy production (shown in Megatons of oil equivalent) paints a different picture:

Now it becomes easier to imagine that we have reached a plateau and could be heading for a downward slope in the very near future. That such a peak would happen was predicted as early as 1956 by Hubbert (for oil) and then again by Meadows in 1972 in their Limits to Growth model. The argument since has been over when oil would peak and what shape the downward slope would take.

In order to assess the chances of near-term collapse it is practically sufficient to just look at oil. Without oil, the modern global economy with its long, just-in-time supply chains cannot function. We have already seen how fragile these supply chains are during the COVID pandemic. That collapse follows when the oil stops should not be controversial. Taking a look at what happened in Lebanon and Sri Lanka recently and in Venezuela and Cuba previously provides clear evidence that without oil the ability to maintain Western living standards simply vanishes.

70% of all oil produced is used in transportation. None of our other primary energy sources are of any use when it comes to modern transport. Coal would take us back to the 19^th century, natural gas is far more difficult to store to make for a viable transport alternative (so is hydrogen). Battery technology makes electrifying planes and long-haul trucks impossible due to their weight compared to energy density. World lithium production today is not even sufficient to electrify all cars in the UK, before we even get to making the change globally. Shipping would have the best options for alternative fuels, if we could prioritise that transition (which is not happening as yet).

The question of collapse then comes down to just two factors – the ability to maintain per capita oil production (given the world population will keep on rising through the initial stages of collapse) and the likely additional oil demand to deal with increasing disruptions and capital destruction due to climate change. Per capita crude oil production was near constant between 1990 and 2018, but there is evidence of decline since:

Of course, this might be discounted as a COVID related ‘dip’ in production, but the fact is that despite increasing oil production quota throughout 2022, OPEC+ (with Russia) has been unable to actually produce at those levels. It fell short by around 2.5-2.8mbpd every time (2.5 million barrels per day is equivalent to 3% of global oil production). The US shale oil boom is coming to a predictable end, the industry has never returned a positive cash flow. Industry analysts now predict that shale oil production will start to decline in coming years.

The underlying problem is that we are now drilling into puddles, not oceans. All the big oil fields were discovered a long time ago, new discoveries are relatively small, more uncertain (plenty of test wells come up empty) and ‘unconventional’ (shale oil, deep sea oil and tar sands all suffer from much higher extraction costs). On top of that, the countries with the biggest untapped reserves – Venezuela and Iran – have been subject to US sanctions for decades, so very little investment in extraction has been possible.

The most exciting oil discoveries of late (deep sea oil off Guyana and Suriname) are expected to produce some 2mbpd when fully developed in a decade or so. By that time US shale production will have probably declined by a far greater amount (the half-life of a shale oil well is only 1-2 years).

The reason nobody seems overly worried is that humans appear to have a hard time imagining that the downward, ‘degrowth’ curve will be as steep as the upward curve has been. The idea that exponential growth could be followed by exponential decline seems alien to humans, despite being a common occurrence in nature in the form of the predator-prey cycle.

We struggle to imagine a future drastically different from the recent past. Dystopian novels and movies usually presume some sudden catastrophic event to wipe out industrial civilisation, not exponential collapse. This lack of engagement with the real threat – exponential economic decline due to energy shortages whilst the population is still rising – dooms us to repeat historic collapses of civilisations. Being prepared means accepting the inevitable collapse and the likely shape of the downward curve. It means questioning the ongoing growth narrative and the personal commitment to ‘fitting in’ with the mainstream delusion. More people need to opt out and ‘collapse early’, which is by far the best mitigation strategy an individual can adopt.