The end of growth?

Nicolas Meilhan Member of les Econoclastes and of ASPO France

0 500 1000 1500 2000

World GDP - 0 to 2008 -

http://leseconoclastes.fr/

“Anyone who believes in indefinite growth in anything physical, on a physically finite planet, is either mad or an economist”

Kenneth Boulding

3

0

10,000

20,000

30,000

40,000

50,000

0 500 1000 1500 2000

World GDP - Billions of 1990 dollars, 0 to 2008 -

Source: Angus Maddison

2008

1988

1964

1950

1870

Oil is by far the main source of energy (and economic growth)

Sources: Shilling et al., 1977, et BP Statistical Review, 2013

Evolution of world primary energy consumption - Million tons of oil equivalent , 1860 to 2012 -

4

30%

27%

22%

8% 6% 4% 2%

80% Biomass

Nuclear

Natural gas

Coal Oil

Hydro

Wind, solar & geothermal

Four of the last five global recessions were preceded by an oil shock

Economic Recession vs. Oil Price

Source: Steven Kopits, June 2009, Douglas Westwood, Oil: What price can America afford?, EIA, NBER

5

Can we still grow our economy if we run out of oil?

Growth in GDP , oil supply and energy supply - Three years average growth, world ,1976 to 2013 -

6

Source: Gail E. Tverberg, « Energy and the Economy - Twelve Basic Principles », Our Finite World, August 2014

-4%

-2%

0%

2%

4%

1975

1980

1985

1990

1995

2000

2005

2010

3 y

ea

rs a

ve

rag

e g

row

th r

ate

Pétrole Energie PIB

Données : BP 2014 & USDA 2013

Oil Energy GDP

Higher cost new oil projects require $80/bbl+ oil price to be profitable …

7

Breakeven of non-producing & recently on stream oil assets - Marginal Top 400 oil fields -

Bre

ake

ven

pri

ce (

$U

S/b

arr

el)

Source: Goldman Sachs Global Investment Research

Cumulative peak production (thousands barrels per day)

…while oil demand (hence GDP per capita) contracts when oil price surpasses $120

8

Oil

pri

ce in

$2

01

1 p

er b

arr

el

Oil price vs. Crude oil extraction - 1965 à 2013 -

Source : Jean Laherrere, ASPO France, EIA

Oil extraction in millions barrels per day

We will extract all the oil that we can afford –less than $120 per barrel and we’ll leave the more expensive in the ground!

Source : Patrick Brocorens, ASPO Belgique

9

All liquid fuels extraction - 1900 to 2100 -

Extr

act

ion

in b

illio

ns

of

oil

ba

rrel

s p

er y

ear

Peak “all oil” is already a reality since January 2011 putting aside US shale oil production…

Crude oil extraction - January 2009 to September 2014-

Source : EIA

Extr

act

ion

in m

illio

ns

of

b

arr

els

of

oil

per

da

y

2009 2010 2011 2012 2013 2014

10

60

65

70

75

80World - USA USA

… which might peak as soon as 2015

11

US crude oil extraction - Millions barrels per day, January 2012 to May 2015 -

Extr

act

ion

in m

illio

ns

of

b

arr

els

of

oil

per

da

y

5

6

7

8

9

10

Jan

12

Jan

13

Jan

14

Jan

15

Tho

usa

nd

s

Source : EIA

8.9

9.0

9.1

9.2

9.3

9.4

9.5

No

v 1

4

Dec

14

Jan

15

Feb

15

Mar

15

Ap

r 1

5

May

15

Peak « all oil » is likely to mean the growth party is over

12 Source : Graham M. Turner 2012 – « On the Cust of Global Collapse? Updated Comparison of the Limits to Growth with Historical Data » GAIA - Ecological Perspectives for Science and Society, Volume 21, Number 2, June 2012, pp.116-124