Thou lost one. All songs on that theme.


The third trend – the massaging of economic statistics […] US unemployment excludes so many categories (like “discouraged workers”) that it hides higher levels of inactivity. The critical distortion is inflation. It feeds into calculations showing “growth”, when evidence from other benchmarks is that Western economies have stagnated for a decade. […]

But a final development is perhaps most concerning. The modern economy began when agriculture created an energy surplus, liberating people to engage in non-subsistence activities. A larger liberation occurred with the invention of the heat engine – energy delivered by labour could be leveraged by coal, oil and natural gas. A single gallon of petrol delivers work equivalent to 360 to 490 hours of human labour.

The critical equation is the difference between energy extracted and energy consumed in extraction – energy return on energy invested (EROEI). Since the Industrial Revolution, EROEI has been high. Oil discovered in the 1930s provided 100 units of energy for every unit consumed. But EROEI has fallen, as discoveries have become smaller and more costly to extract. The killer factor is the non-linear nature of EROEIs. Once returns ratios fall below 15:1, there is a dramatic “cliff-edge” slump in surplus energy, combined with a sharp escalation in cost. And the global average EROEI may fall to 11:1 by 2020. Energy will be 50 per cent more expensive, in real terms, than today. And this will carry through into the cost of almost everything – including food.

We are nearing the end of a period of 250 years in which growth has been the assumed normal. And, without action, this will have stark implications for the economies of the West.

{ Tim Morgan/City A.M. | Continue reading }

art { Cyprien Gaillard }