Long-time Peak Prosperity readers appreciate the importance of energy to our future..
The fox that spends 100 calories catching 800 calories’ worth of rabbit lives to hunt another day. The one that spends 801 calories to catch 800 calories of rabbit loses. Eventually it dies from an energy deficit.
The stunning, historic, unprecedented and [insert even more grandiose superlative here] collapse in oil demand tells us that, without a doubt, the economy is in the process of collapsing.
The reasons are many and complex. Modern banking requires ever-expanding piles of credit. Supply chains are both long, complicated and finely tuned for a ‘perfect’ world that no longer exists. We are quickly learning that our corporations have been optimized to be cost-effective; but not resilient.
The entire system rests upon a particularly egregious flaw; it is designed in such a way that it is either happily expanding or collapsing into chaos. It’s a binary outcome with no middle ground: Growth = stable expansion. Retreat = unstable collapse.
The Master Resource
Oil is THE master resource. It is the king of energy.
If you asked me to pick just one macro statistic that would provide me with the information I needed to assess the health of the global economy, I would choose oil.
Not the price, mind you which can be (and often is) subject to a great deal of geopolitical hanky-panky. But the amount of oil consumed.
This chart shows why:
Up the left, or y-axis we have the global economy. Along the bottom, or x-axis we have total world energy consumption (expressed in millions of tons of oil equivalent, or MTOE).
What that straight line tells us, in no uncertain terms, is that economic expansion and energy consumption are very tightly coupled.
by paulie57 
