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Gail Tverberg: ‘Oil Supply Limits and the Continuing Financial Crisis’ paper

Gail Tverberg: ‘Oil Supply Limits and the Continuing Financial Crisis’ paper thumbnail

I was an invited speaker at the “7th Biennial International Workshop ‘Advances in Energy Studies,’” in Barcelona, Spain in October 2010. Afterward, I wrote a peer-reviewed academic paper related to my talk called, “Oil Supply Limits and the Continuing Financial Crisis.” It now has been published in the January issue of Energy. It is available free at this link (probably temporarily).  The rest of the articles are also available free. A complete listing of articles in the January issue can be found here.

My article abstract is as follows:

Since 2005, (1) world oil supply has not increased, and (2) the world has undergone its most severe economic crisis since the Depression. In this paper, logical arguments and direct evidence are presented suggesting that a reduction in oil supply can be expected to reduce the ability of economies to use debt for leverage. The expected impact of reduced oil supply combined with this reduced leverage is similar to the actual impact of the 2008–2009 recession in OECD countries. If world oil supply should continue to remain generally flat, there appears to be a significant possibility that oil consumption in OECD countries will continue to decline, as emerging markets consume a greater share of the total oil that is available. If this should happen, based on these findings we can expect a continuing financial crisis similar to the 2008–2009 recession including significant debt defaults. The financial crisis may eventually worsen, to resemble a collapse situation as described by Joseph Tainter in The Collapse of Complex Societies (1990) or an adverse decline situation similar to adverse scenarios foreseen by Donella Meadows in Limits to Growth (1972).

Dinner with a group of attendees and speakers at the Barcelona conference. I am wearing the red jacket.

I was in Barcelona for an entire week, for the conference and for a related meeting with high school students. The meeting with high school students was in a large auditorium. Students were asked to submit questions in advance relating to oil limits and possible ways to deal with them. There was also time for some impromptu questions.

Gail Tverberg Charles Hall Joe Tainter and Mario GiampietroGail Tverberg, Charles Hall, Mario Giampietro, and Joseph Tainter in auditorium in Barcelona, Spain. They would later answer questions from students from 11 high schools in the area. Translation from Catalan to English was provided by headphone.

Our Finite World

6 Comments on "Gail Tverberg: ‘Oil Supply Limits and the Continuing Financial Crisis’ paper"

  1. BillT on Wed, 1st Feb 2012 5:22 am

    I like Gail’s presentations. She says what is happening in plain words that anyone who understands English can understand what she is telling us.

    Of course less oil means contraction of economies and higher prices for everything. I am going to read here whole report at the site I put in above. The site she refers to is not available.

  2. fiedag on Wed, 1st Feb 2012 5:49 am 

    Interesting is the conclusion that the price of oil cannot rise indefinitely – that demand destruction sets in at a much lower price than previously thought.

  3. dorlomin on Wed, 1st Feb 2012 9:10 am 

    Demand destruction is already setting in in many economies. We are experiancing less demand for motor fuel in much or Europe and the US. Although demand in increasing in some economies it is having to be balanced out by in demand in others.

    Its as if there was some kind of limit to growth. Catchy title, someone should write a book or something.

  4. dsula on Wed, 1st Feb 2012 12:21 pm 

    Demand destruction set in 70 years ago, when my grandfather couldn’t afford gas for his tractor, but used oxen instead to plow.

  5. dsula on Wed, 1st Feb 2012 12:22 pm 

    Demand destruction sets in as soon as something costs more than 0.

  6. Windmills on Wed, 1st Feb 2012 3:25 pm 

    Thanks, Gail. Great stuff.

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