Energy and the Economy – Twelve Basic Principles | Our Finite World

Murphy’s Law–the missing ingredient in the accelerating chaos of the world, the inevitable American economic and financial market collapse. Cause, a myriad of possibilities, but rising interest rates and rising oil prices are two damn good possible catalysts. Two interesting perspectives below.

shape-of-typical-secular-cycleThere is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.

Twelve Basic Principles of Energy and the Economy

1. Economic models are no longer valid, as we start getting close to limits.

We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts when it is distant from limits. Unfortunately, these economic models are worse than useless as limits approach because modeled relationships no longer hold. For example:

[gview file=”https://troutinmilk.com/wp-content/uploads/2014/09/Energy_and_the_Economy__Twelve_BasicnbspPrinciples.pdf”]

[gview file=”https://troutinmilk.com/wp-content/uploads/2014/09/Trader_Who_Scored_100_Million_Payday_Bets_Shale_Is_Dud.pdf”]

via Energy and the Economy – Twelve Basic Principles | Our Finite World.

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