Predicting the future has not gotten any easier. Here at The Oil Drum, we picked up early on one of the great themes of the 21st century. Others denied the evidence until well after it was staring them in the face. But it is much harder to see where things go from here.
The second half of the 20th century was defined by remarkable growth in oil consumption, population, credit and debt, and all manner of other things. Neo-liberal economists have become accustomed to getting out their rulers to make predictions of the future and holding all spell-bound with their macro-economic prescriptions. I think those days of extrapolating the past as a useful guide to the future are over, and the sooner we develop a new economic paradigm the better. The future is likely to be one of discontinuities and sharp transitions and our rudimentary models and bureaucratic systems will not be up to the job.
If deleveraging of the record amounts of debt in every corner of the global economy is not already enough to start a downward spiral (still unexpected by the mainstream), then a ceiling on oil supply and the inevitable price response to force declines primarily in OECD countries will trip us up anyway. That forced transition to declining consumption for OECD countries could feel pretty painful rather soon, even before global oil supply decline sets in.
The good news is that resource decline rates look lower than feared a few years ago, and the plateau may continue (certainly not to 2030 though!). In an engineering sense, we may be able to adapt at the pace required, but whether we can adapt our economies and credit money system in particular is a different question.
Looking ahead, the only thing I can say with any confidence is that the years and even decades to come are likely to be characterised by much greater volatility than we are accustomed to. It could be a very bumpy ride.
Read the whole article at the Oil Drum here.