As economies tumble, inflation surges and global food prices soar to critically high levels, two sectors seem to have hit the jackpot in 2022 – energy giants and grain traders.
My analysis has as its premise that the economy behaves like other physical systems.
We have been living in a world of rapid globalization, but this is not a condition that we can expect to continue indefinitely.
I approach the subject of the physics of energy and the economy with some trepidation. An economy seems to be a dissipative system, but what does this really mean?
Either commodities are correctly forecasting the direction of the overall world economy or the world’s "core" economies are about to lead the world economy back toward faster growth. The outcome will determine the fate of trillions of dollars of investments premised on the idea that one of these indicators is right.
Why is the price of oil so low now? In fact, why are all commodity prices so low?
In this post, I show some longer-term time series relating to energy growth, GDP growth, and debt growth–going back to 1820 in some cases–that help us understand our situation better.
Our economy is like a pump that works increasingly slowly over time, as diminishing returns and other adverse influences affect its operation. Eventually, it is likely to stop.
Why are commodity prices, including oil prices, lagging? Ultimately, the question comes back to, “Why isn’t the world economy making very many of the end products that use these commodities?”
What is the real story of energy and the economy? We hear two predominant energy stories.
Since about 2001, several sectors of the economy have become increasingly inefficient, in the sense that it takes more resources to produce a given output, such as 1000 barrels of oil.