Stephen Monrad

I just watched a video of a lecture on Peak Oil. It’s about an hour long, but contains good information. It can be found at http://www.abdn.ac.uk/cops/events/energycontroversies/peak-oil.php.

Professor Kjell makes the observation that GDP and oil usage are highly correlated. If oil production falls, it is likely to drag down the economy with it if alternative energy sources can’t be developed. While Kjell doesn’t make a causal argument for why declining oil will cause an economic contraction, I think the connection is simple.

The high productivity of our economy today is based on using machinery that runs on oil. We aren’t bigger, stronger, or faster than we were a few hundred years ago. We get more done today only because we have machines that are highly productive. The machines, unfortunately, need energy. Much of that energy comes from oil. Take away the oil and the machines stop working. Without machines, we are left only with our own physical strength, which is no different than it was before the industrial revolution.

Now, I don’t think we are going to just turn off all our machines and pick up shovels again. There is still going to be some energy to run our machines. We will just have to use machines much more wisely than we do today. The economy is going to stop growing for sure. It is probably going to contract. If we get our act together, though, we can hopefully avoid a total collapse.