Author: stephenhinton

Speaking at the close of the G20 summit of world leaders in Brisbane Australia, British Prime Minister David Cameron exclaimed that “red warning lights are flashing on the dashboard of the global economy”, threatening another recession.

Of course, Cameron was not talking about the UK economy, which is going great guns, according to the British government, with six months to go a general election. Instead, he was covering his back, so that if any downturn in the British economy took place it could be blamed on the rest of the world. You see, as Cameron put it in an article for the Guardian, don’t blame me, you lefty liberals. If things go wrong from here, it will be because of the Eurozone that you all like so much. “The Eurozone is teetering on the brink of a possible third recession, with high unemployment, falling growth and the real risk…

On Monday, September 29, the Wall Street Journal (WSJ) published a story called “Why Peak Oil Predictions Haven’t Come True.” The story is written as if there are only two possible outcomes:

1. The Peak Oil version of what to expect from oil limits is correct, or
2. Diminishing Returns can and are being put off by technological progress–the view of the WSJ.

It seems to me, though, that a third outcome is not only possible, but is what is actually happening.

3. Diminishing returns from oil limits are already beginning to hit, but the impacts and the expected shape of the down slope are quite different from those forecast by most Peak Oilers.

Area of Confusion

In many people’s way of thinking, the economy is separate from resources and the extraction of those resources. If we believe economists, the economy can grow indefinitely, with or without the use of…

Oil and other commodity prices have recently been dropping. Is this good news, or bad?

Figure 1. Trend in Commodity Prices since January 2011. Brent spot oil price from EIA; Australian Coal from World Bank Prink Sheet; Food from UN’s FAO.

I would argue that falling commodity prices are bad news. It likely means that the debt bubble which has been holding up the world economy for a very long–since World War II, at least–is failing to expand sufficiently. If the debt bubble collapses, we will be in huge difficulty.

Many people have the impression that falling oil prices mean that the cost of production is falling, and thus that the feared “peak oil” is far in the distance. This is not the correct interpretation, especially when many types of commodities are decreasing in price at the same time. When prices are set in a world market, the big…