What happens when...

... the irresistible force meets the immovable object?

Which is mightier: the logistic equation with it's stern command that production shall increase no more? Or these two-and-a-half billion people with their exponential desire to drive?

Oil consumption of China and India as reported by BP Statistical Review of World Energy.

Here's the same data with exponential fits (which capture the trends quite nicely) extrapolated out to 2025. By then Chinese consumption would be roughly similar to that of the US, if the latter continued to grow at historical rates (unlikely).

Oil consumption of China and India as reported by BP Statistical Review of World Energy, together with exponential fits to the data extrapolated to 2025.

For good measure, here's the year-on-year growth rates.

Annual percentage changes in oil consumption of China and India as reported by BP Statistical Review of World Energy.

As you can see, the long term growth rates aren't that different. The eye is fooled in the first two graphs. If we replot the second one on a logarithmic scale we can see the similarity in slope. The two countries had similar usage in the 1960s, but then the Chinese got a leg up starting in the middle of the Cultural Revolution of 1966-1976. Quite striking that this incredibly repressive period of turmoil should have coincided with major increases in oil usage. Anyway, the Indians have never caught up since.

Oil consumption of China and India as reported by BP Statistical Review of World Energy, together with exponential fits to the data extrapolated to 2025. Logarithmic scale on the y-axis.

To put flesh on the abstractions for once, here's the scene in China:

And here it is in India:

Here's a foto from China last Summer:

When I hear all these people around here talking about how China is the current `Promised Land of Opportunities' for economic investment, I can's stop asking myself: With which energy resource?
Many people say: "The 20th century was the American century, the 21th century will be the Chinese century"
I say: "The 20th century was the Oil century, the 21th century will be the Oil depletion century".

There is a good article on Money & Energy on the Energy Bulletin website:  


"Money is nothing more than the right to command energy to do what you want it to do."

The WSJ had an interesting article yesterday about what is basically a global savings glut. Reading the article, it occurred to me that capital and energy are going in opposite directions--capital going up and energy resources depleting.  Of course, energy resources have been depleting since we first started mining for coal and drilling for oil.  The key point, as we know, is that we are looking at the peaking of our ability to grow the daily oil supply.

If we looked at the ratio of total world capital in dollars equivalent divided by total remaining BTU's, that ratio is increasing at an extraordinary rate--because the numerator (dollars) is rising while the denominator (BTU's) is falling.  

Another way to look at it would be total capital divided by total world BTU consumption (from nuclear + fossil fuel sources) per day.  In terms of oil equivalent, the world consumes the equivalent of about 200 mbpd from nuclear + fossil fuel sources--the equivalent of a billion barrels of oil every five days.  

We are now looking at the probability that the actual daily supply of nuclear + fossil fuel sources is about to enter a long term decline.   So, what this means is that even on a daily supply basis, the ratio of dollars to BTU supply will start skyrocketing because the numerator is rising while the denominator is falling, at least until the world economy starts contracting.  

The article on Money & Energy is very interesting indeed, especially if you follow the link to the Forbes article by Huber behind it. It reminds me of a comment made by the TVA management at the srart of the disasterous TVA plan to build 20 nuclear plants in the 70-80s, when they bragged that 'electricity would be so cheap that it would cost more to meter it than to make it'. TVA is still trying to pay off the debt from that misadventure.
TVA ran into the buzz saw of much cheaper oil, which fell like a rock in 1981. The nation's existing nuclear plants are making a lot of money for their owners today, as fossil fuels, not least coal, rise sharply. And, little credit is given to the nukes for avoiding CO2 emissions, the value of which is incalculable.
If fossil fuel generating plants were taxed for the true cost of CO2 emissions, or for the future value of the hydrocarbons they burn, we would already be in a crash program to replace them with nukes.
See page 1 of this PDF.  From 1900 to 1970 US oil consumption followed a beautiful exponential growth to reach some 17-19 mbpd.  That curve looks a bit like your extrapolations for India and China above.

My point is that just because exponential growth can't continue doesn't mean something bad will happen.  Okay, the two situations are very different.  The US may have swapped its primary oil consumption growth for a growth in imports of oil based products manufactured in... China for example.  China and India don't have anyone to export this oil demand growth to!

I think this is the big question. We know what the US did to achieve that and we know it was somewhat painful but not disastrous. Certainly US GDP growth has not been the same since. However, the US in 1973 was hardly the same place as China or India in 2005. So we need to explore what might happen in those contexts.
That's a great chart. Imagine that you were someone from 1970 wondering what would happen with U.S. oil consumption, and a time traveler from the future came and showed you that chart. You'd see the exponential growth which had gone on for most of a century coming to a sudden and lurching halt, with nothing but ups and downs for the next 30 years.

You'd think, my god, the U.S. must have gone to hell. All those decades and centuries of thinking the world was getting better, that each generation would have more than the one before, must have come to an end. The U.S. must have descended into a turmoil of suffering and bitter fighting over who gets the next barrel of oil. It must have been 30 years of stagnation, of no economic growth, of no technological progress. The world of 2000 must be far worse than the riches we have here in 1970.

This is basically what Peak Oilers have been predicting when they imagine the same thing happening on a worldwide scale. This is what lifeaftertheoilcrash and similar sites are predicting.

Yet we know it is not true. U.S. economic growth over the past 30 years has been robust. Productivity is increasing faster than ever. Technology has made incredible advances. The U.S. today is so far ahead of 1970 that it is unbelievable. Longevity continues to grow as medicine improves, technology has given us new tools that were not even imagined back then, and we are on the verge of even more dramatic changes in these areas. By any objective standard, the U.S. today is far richer and has a far higher quality of life than it did in 1970.

Who is to say that the same thing can't happen to the world as a whole, even if oil does peak soon? Suppose a time traveler from the world comes to you and shows you a chart of world oil consumption over the next few decades that looks much like what the U.S. experienced from 1970-2000? A general leveling off, with lots of ups and downs?

Are you going to assume that this is a world of suffering and hardship, a dog eat dog struggle for survival with an ever increasing desperation to grab the few remaining dregs of oil? A world with a lower lifespan (or even a population "dieoff"), a world without the wealth to expand technology and solve its problems?

Or are you going to assume that human intelligence, creativity and productivity will rise to the challenge, as it has done before? Look at the lesson from 1970 and think hard before you bet against the intellectual power of six billion people working to improve their lives and those of their children. I would never bet against humanity in such a challenge.

In real GDP (goods manufactured) who says we have continued to grow since the mid 1970"s?  We have jobs and we have goods but we don't make as much as we used to.

Maybe we just borrowed our way to prosperity the last 25 years?

The U.S. got where it is today on cheap energy.  Yeah, I would bet against 6 billion people doing what the U.S. did.  It took 25% of the world's energy consumption to get 300 million people this well off; it's a pretty safe bet that the other 5.7 billion can't do it on the rest.
One difference - in 1970 only the local supply of oil had peaked, worldwide the supply was still growing.  That means that the energy supply which our existing infrastructure was designed for did not need to change all that rapidly, as there was plenty of oil to supply it - we just had to pay more for it for a while.  The infrastructure changes that did occur (moving electrical generation from oil to coal and NG, etc) were driven mostly by price rises.

It seems to me that this may be different if we face the prospect of decreasing supplies of oil at any cost.  Of course, it is all related to how fast worldwide depletion occurs.  Also, our demand is much greater now, so it will be harder to transfer it to other sources.  Of course, if depletion happens slowly, then societal disruption will not need to be great, which is a point many have made before.  It's all about the rate.  

Let me tell you a story.

A poor man approaches a heavily dressed rich man (a famous economist BTW) and asks him for a dollar. The rich man stops, looks at him and lights a luxury cigar.
-"Do you see this cigar, my friend?"
-"Yes, what about it?"
-"It costs 100$. If I only quit smoking I can earn $3000 per month and live wealthy and happily. So, why can't you just stop smoking?"

By any objective standard, the U.S. today is far richer and has a far higher quality of life than it did in 1970.

I thought only Sith Lords speak in absolutes. By "any" obective standard?

Talk about your freak-o-nomics. Halifn's argument leaves out the HUGE HUGE externality of fossil fuels coming in from foreign sources to save the US economic glutonmaximus. I guess those time machine aliens are going to come to our global rescue the next time around and bring us extra-galactic oil. Right. Well yea..eh..aah. You never know. There's sound logic for you.

As for "far richer":
I don't know if being in debt up to your eyeballs (2 Trillion) makes you "richer".

As for "quality of life", it's a complicated subject:




I have sympathy for your argument, step back, and hope to find time to properly read the flynnresearch links, they look interesting.

It's quite hard to evaluate USA personal wealth, let alone quality of life, over the last 20 or 30 years, many of the official stats have been so messed with. I have seen credible data that indicates the income of the lower 80% of the US population has declined fairly steadily in constant $ terms since the late 1970s. I think that US per capita wealth in constant $ terms peaked in about 1978.

The truth for more than 50% of the US population is probably: life is worse now than 30 years ago. Despite economic growth, despite the extra consumption of fossil hydrocarbons, despite the extra money bouncing around. I'm not talking relatively (they feel poorer but are actually richer) I am talking in absolute measures of life quality. Is a child richer for watching hours of cartoons on TV or for interacting with a parent?

Later, when we or our descendents look back, I think they'll conclude that somehow we bought a delusion and went off the rails in many ways. It will seem so obvious then, in retrospect. They will find it hard to understand how we couldn't see it.

There are many inaccuracies in Halfin's post. US oil consumption was exponential to 1973, corrected by 20% by 1980 then grew on a linear basis to date and is forecast by the EIA to continue so.

The problem that oil comsumption may not level off, it may start to decrease.
  Sir,I would very much like to belive in your benevolent analisis...however haveing looked at history,and knowing what I know of mankind,I would ask you to consiter Rome,at her glorious height.....and the thousand years of darkness after before you lay your bet
That's an amazingly good exponential fit for the last 20 years both India and China. Did US data fit a similar equation early on and, if so, what happened next? That could give clues as to what China would like to do next un an unconstrained world.

Speaking of the irresistible force meets the immovable object...

Today FTW's agent publicist Ken Levine received a call from radio station KHNC in Denver. The short message stated that Jerome Corsi would be unavailable to debate FTW Publisher Mike Ruppert tomorrow as scheduled and that Corsi's staff would call to reschedule next week."

However,the Subcommittee on Energy and Air Quality of the US House of Representatives are going to be "Understanding the Peak Oil Theory" at 09:30 ET December 7, 2005 (today, Thurdsday) and you can watch it:

That's just what I thought when I saw those graphs. See the PFD linked to in my post above for exactly the data about the US you're looking for!
Many thanks Chris, looks like it stays exponential until it gets hit by external events - in the USA case the oil shocks of 1973 to 1980. USA consumption looks to have resumed a linear uptrend from 1980 having dropped about 20%, but that's a guess based on glancing at that graph.
That US House of Representatives hearing sounds interesting.  Will the audio be online?  If not can someone record it for us?
Video and audio online, checkout the link. I would expect CSPAN to have video recordings available online for some time (months) after the event as well.

The EIA, bless their cotton socks, also think that US demand is set on a linear uptrend:

...but sometimes I think that straight lines and averages are the only maths the EIA use in their forecasts ;-)

Very interesting analysis Stuart! The Chinese population is becoming more concentrated in cities very rapidly. It seems that there is a good correlation between the urban population fraction and oil consumption:

The case of India is different because the rural population fraction has been around 70% since the 80s, I will try to do the same graph for India later.

Could you cite your data sources?
Oil consumption: BP Statistical Review of World Energy 2005
Rural population percentage: Statistical Indicators for Asia and the Pacific 2004 Compendium, Volume XXXIV
Note: the definition of rural/urban population varies widely between studies (see Definitions: Urban, Rural, City, Town).
For those interested in India, the NY Times is doing a long series on India's plans for growth. The series started with the massive highway project that India's undertaking. There's another article about the status that having a car confers on the owner.
I wonder if you get the same status if you park it in front of your home, wash it weekly, and don't drive it?
I read the whole article.
Just what we need a whole Culture learning to love the highway.

Just like we do.

Gentlemen, start your engines! A whole culture devoted to driving their automobiles. I hope they will learn not to use their cell phone while driving or install that TV on the front dash, so they can watch the telly!

Hey wait a minute.....maybe i should be opening auto insurance outlets over there using a lizard wearing a turban to promote my business. I can see it now!

They have a lot worse problems on the roads in India than talking on the cellphone. I've been in India a lot in the last couple of years, and the driving style in the cities there is nothing like here. There is no lane discipline - the vehicles all basically function like a big shoal of fish, jostling and moving amongst each other all over the road. Everyone honks all the time to let others know where they are. About half the vehicles are scooters. It's very common to see a family of four on a scooter - dad riding, little boy in front of him, Mom behind, and little girl in Mom's lap. Accidents are extremely common, although speeds are typically low enough that the damage is less than it would be in accidents in the west. Although the roads are dominated by gasoline powered transport, there are still enough bicycles, goats, oxen, handcarts, etc to make a difference. The pollution is incredible - many times worse than the smoggiest US cities. In some cities (Delhi I believe), they have regulations requiring all vehicles to run on natural gas.

On the express ways there are few two-wheelers, but very large numbers of trucks. They are very underpowered compared to US trucks and crawl up hills at 5-10mph. They break down a lot too. They are all decorated with flowers, paintings of Hindu gods, etc, and say "Horn OK" on the back to encourage other drivers to announce themselves.

Stuart, your essays and graphs are invaluable. Keep up the good work, sir!


I'll put my money on the irresistable force of the mighty Logistic Equation since the "immovable object" does, in fact, move due to supply shortfalls to support Asian exponential growth. Importantly, they are competing with each other. For example, we read today that China, India gear up for new Kazakh oil firm sale.
China and India have gone head-to-head in a number of big oil and gas asset sales this past year, with CNPC also taking a $1.4 billion Ecuador package but ONGC winning a $2 billion Nigerian oilfield selloff by little-known South Atlantic Petroleum.
"And yet it moves..."

Actually both of them move. The force is not irresistable and the object is not immovable. This is the lesson from economics that Peak Oilers refuse to hear.

I think Galileo (of "yet it moves" fame) would have empathized with the plausibility of minority theories (e.g., Peak Oil / helio-centricity) rather than blindly and unquestioningly accepting the religious cornucopian theories (Adam Smith's Invisible Hand will always provide, the markets will always provide, government is always right, oil is infinite --so worry not).

I think many people who look closely at China would say that it is in a bubble.  They have had a real-estate bubble just like here - people were buying and flipping condos in major cities.  Venture capital people were over there throwing money anywhere they could - smarter ones were trying to be careful - ones from overseas with less experience in China were more indescriminate.  Expat Chinese were returning to China to work for startups.  And so on.  Some of the stuff I was reading was from a few years ago, and I haven't seen any indication that things have slowed down at all over there yet.

It reminds me in so many ways of the Internet boom here.

This does bring up the other point that others have raised though.  It seems like there is an oversupply of cash chasing investments around the world.  People are not satisfied with 6% return any more - they now expect a 20% return, which means riskier investments.

I agree with you. The depression, when it comes, is likely to be global as there are bubbles to burst in many places, not least China and the US.

For an interesting and very detailed read on the subject of too much cash chasing too few good investments see The Dollar Crisis by Richard Duncan (not the same Richard Duncan associated with Olduvai theory).

I have another more optimistic interpretation of these figures:
Between 1980 and 1995 about 40% of the world population has lived with 2.5-3 mln.bpd.

This should stop the fears that PO will cause a world-wide hunger... The whole world can survive with 6 mln.bpd. - a rate that we can possibly expect not earlier than the end of the century. I suspect (and hope) that when the time comes if we are forced to choose between food and cars we will not pick cars.

There are many people starving in the world right now. I do not know many people who have sold their cars in order to send the money to the poor starving people. Perhaps I am starting to get too old and cynical, but I have a hard time imagining this aspect of human nature changing much.
There is currently no connection.  People aren't starving now because of anyone's oil consumption.  The world produces more than enough food to feed everyone.  Any current starvation is due to poor distribution.  The connection will arise when oil becomes expensive as it becomes scarce.  When the situation arises, i.e., when food production comes to be limited by available fossil fuel  imput, the connection will become more apparent.

To expect the worst of people is a self-fulfilling prophecy.  If you don't believe that others will do the right thing you will be less likely to do it yourself and the expectation propagates through the culture.  The converse is also true.

No offense intended Beto, but your view that no one is starving because of someone else's oil consumption is naive about how much of this starvation has come about. Much of the starvation (and malnutrition which affects even more) is the result of the adoption of "green revolution" agriculture that is based on petrochemical pesticides, NG based nitrogen fertilizer and hybrid seeds. All these things cost money that the typical peasant doesn't/didn't have. But some larger farmers could afford them, increasing their yields, dropping the price of the produce, squeezing margins of the peasants, who are forced off the land when they can't manage their debt. That land is bought up by the GR successful farmers, expanding their holdings (and profits) while the peasants migrated to the cities where they work (or not) for a pittance, unable to afford the food they used to grow.

The connection is not always direct, but in this case it is pretty clear.

OK.  There is a connection but it is pretty indirect.  I would still consider it a result of maldistribution (enough food is produced but it doesn't get to all of the people who need it) rather than a result of a scarcity of oil.

Our current economic paradigm generates pathologies like this all the time.  We want to take advantage of the efficiencies associated with economies of scale but have no way other than an increase in consumerism to generate employment for those left unemployed by these efficiencies.  Those of us who would like to switch from reliance on automobiles to mass transit have to face questions like, "How are we going to feed the resulting unemployed auto workers?"

Well a reduction in automobile production doesn't result in reduced food production.  Any connection is an artifact of the way we have structured our economy.  It is a result of human choices and nothing else.  We need to rethink these choices.

Unfortunately, in the industrialized world the choice between food and cars is not so clear cut.  As only a relatively small fraction of the people in the industrialized world are actually engaged in farming, the vast majority of people obtain their food by working at a job and then paying for their food with a portion of their wages. Having a job means that you need transportation to and from that job, and in the US in particular that means having a car, and having a car means using lots of oil. So, for the vast majority of people in the industrialized world: no oil means no car; no car means no job; and no job mean no food.

Furthermore, most farmers in the US do not even grow their own food. Most typically grow one or two commodity cash crops like wheat, corn,or soybeans. Others might grow a small number of different vegetables. Ditto for livestock operations. Thus, most farmers in the US buy most of their food in the supermarket just like everyone else. While such farmers could, in an emergency become food self-sufficient, most currently are not.

For that 40% of the population who only used 3 million bpd of oil, I wonder where they rank on the 'wretchedness index', which must have a very nice inverse correlation with oil consumption.

This is of course the status quo... My point is that when things start to change, which will have to happen one way or another, the worst that can happen is to go back to their type of leaving. The fearsome scenarios of people eating each other because of lack of food are let's say too pessimistic. This of course in the absence of a global war over resources - this is the worst of the worst scenarios.
sorry typo again...
"type of living"
"So, for the vast majority of people in the industrialized world: no oil means no car; no car means no job; and no job mean no food."

This is complete shit.  Most of the people in the industrialized world don't live in the USA.  In addition, in the USA anybody who lives outside big cities claims they can't live without a car.  I know from personal experience that this is not the case.  I know several people who claim they can't live without a car because they live in suburbs when I know for a fact that they could commute to work on public transportation in less time than I do.  They just don't want to be inconvenienced.

They are capable of saying in one breath that millions of people are going to die because of oil shortages and with the next breath claim that they can't do anything about it because they just don't want to be inconvenienced.  Then you'll hear them claiming that they deserve to be among the survivors because they've made themselves aware of the situation and they're arming themselves to be sure.

Three cheers for Jevon's paradox, the get-out-of-jail-free card for peak oilers.

OK, if you want to be  ultra-precise, I will revise my statement you quoted as follows:

"So, for the vast majority of people in the UNITED STATES: no oil means no car; no car means no job; and no job mean no food."


Can you deny that the statement is true?

And yes, I AM talking about the status quo, for what else would I be talking about/

I can't prove whether or not your revised statement is true or not and I doubt that you can either.  What I can say (and have said) is that many who claim that they can't live without a car, can, and more easily than I can.

With awareness comes responsibility.  When someone tells me that energy shortages are going to end our civilization and result in a Hobbesian war of all against all, that requires them to everything in their power to reduce their energy consumption to prevent this from happening.  When they latch on to an outdated and irrelevant economic concept like Jevon's paradox and use it as an excuse for doing nothing about their own contribution to the problem I have to question whether it's appropriate to consider them decent human beings.

It isn't just cars, of course. McMansions are another aspect of the whole thing - my hope is that higher heating bills this winter will squish this bug just like higher gas prices have squished the SUV craze.

Then you need to go beyond this.  So much of everything we do is energy intensive.  Consider just to ship fresh produce from  Florida, Mexico or California to New England in the wintertime.

In any event, it is clear that Europe can do quite nicely on half the oil we use in the U.S. - I don't see any reason why this won't be doable.  It is just a matter of finding the political will.  Unfortunately that will have to wait until 2008..

Europe has urban and rural, with little suburban.  The cities have decent mass transit, unlike the U.S.  If we wanted to be like Europe, we should have started before McMansions were invented.
In any event, it is clear that Europe can do quite nicely on half the oil we use in the U.S. - I don't see any reason why this won't be doable.

There are enough structural issues to make it a real challenge:

                      EU 25           USA
Sq km (000)     3,977        9,631
Roads km       4,725        6,348
Population       459,000    297,000
people/sq km    115.4      30.8

Europe has a smaller space, fewer roads, more people living more densely, good public transport built over decades of investment, far more efficient cars, tolerance for cooler homes, and the list goes on.

If Americans lived a European lifestyle, they would still use more oil per capita just because of bigger spaces.

China has an official objective to double their GDP between 2000 and 2010. Can growth keep up until 2025? Probably not, in part because there will not be enough oil to fuel it all.

But consider:
China has 1.306 billion people, which is 4.4 times the size of the US population of 296 million. If the Chinese all consume, even at a very frugal level, it adds up to very big numbers.

If China used the same amount of oil as the US in total, their barrels per-capita consumption would still be only 22.6% of America's per-capita consumption. That does not sound like an implausibly big number.

I suspect the constraints on Chinese growth will be the availability of oil, transport, and world markets for their products. There is certainly no lack of people, drive, or ingenuity.

Matt Simmons says that as oil gets scarcer it will be more expensive to ship goods. That might brake the speed at which the US outsources its manufacturing to China. It may be that in the future fuel costs begin to compensate for wage differentials when choosing between domestic and imported goods.