{"id":22036,"date":"2016-10-16T18:55:12","date_gmt":"2016-10-16T23:55:12","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22036"},"modified":"2016-10-16T18:55:12","modified_gmt":"2016-10-16T23:55:12","slug":"why-energy-prices-are-ultimately-headed-lower-what-the-imf-missed","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22036","title":{"rendered":"Why energy prices are ultimately headed lower; what the IMF missed"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"https:\/\/ourfiniteworld.com\/2016\/10\/11\/why-energy-prices-are-ultimately-headed-lower-what-the-imf-missed\/\" rel=\"bookmark\">Why energy prices are ultimately headed lower; what the IMF\u00a0missed<\/a><\/h3>\n<div class=\"entry-meta\">We have been hearing a great deal about IMF concerns recently, after the release of its\u00a0<a href=\"http:\/\/www.imf.org\/external\/pubs\/ft\/weo\/2016\/02\/\">October 2016 World Economic Outlook<\/a>\u00a0and its\u00a0<a href=\"http:\/\/www.imf.org\/external\/am\/2016\/\">Annual Meeting<\/a>\u00a0October 7-9. The concerns mentioned include the following:<\/div>\n<div class=\"entry-content\">\n<ul>\n<li>Too much growth in debt, with\u00a0<a href=\"http:\/\/www.telegraph.co.uk\/business\/2016\/10\/09\/china-must-wean-itself-off-debt-addiction-if-it-is-to-avoid-fina\/\">China particularly mentioned<\/a>\u00a0as a problem<\/li>\n<li>World economic growth seems to have slowed on a long-term basis<\/li>\n<li>Central bank intervention required to produce artificially low interest rates, to produce even this low growth<\/li>\n<li>Global international trade is no longer growing rapidly<\/li>\n<li>Economic stagnation could lead to protectionist calls<\/li>\n<\/ul>\n<p>These issues are very much related to issues that I have been writing about:<\/p>\n<ul>\n<li>It takes energy to make goods and services.<\/li>\n<li><a href=\"https:\/\/ourfiniteworld.com\/2016\/02\/08\/the-physics-of-energy-and-the-economy\/\">It takes an increasing amount of energy consumption to create a growing amount of goods and services<\/a>\u2013in other words, growing GDP.<\/li>\n<li>This energy must be inexpensive, if it is to operate in the historical way: the economy produces good productivity growth; this productivity growth translates to wage growth; and debt levels can stay within reasonable bounds as growth occurs.<\/li>\n<li>We can\u2019t keep producing cheap energy because\u00a0<strong>what \u201cruns out\u201d is cheap-to-extract energy<\/strong>. We extract this cheap-to-extract energy first, forcing us to move on to expensive-to-extract energy.<\/li>\n<li>Eventually, we run into the problem of energy prices falling below the cost of production because of affordability issues. The wages of non-elite workers don\u2019t keep up with the rising cost of extraction.<\/li>\n<li>Governments can try to cover up the problem with more debt at ever-lower interest rates, but eventually this doesn\u2019t work either.<\/li>\n<li>Instead of producing higher commodity prices, the system tends to produce asset bubbles.<\/li>\n<li>Eventually, the system must collapse due to growing inefficiencies of the system. The result is likely to look much like a \u201cMinsky Moment,\u201d with a collapse in asset prices.<\/li>\n<\/ul>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Why energy prices are ultimately headed lower; what the IMF\u00a0missed We have been hearing a great deal about IMF concerns recently, after the release of its\u00a0October 2016 World Economic Outlook\u00a0and its\u00a0Annual Meeting\u00a0October 7-9. The concerns mentioned include the following: Too much growth in debt, with\u00a0China particularly mentioned\u00a0as a problem World economic growth seems to have [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[2488,1233,418,434,1232],"class_list":["post-22036","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-energy-prices","tag-gail-tverberg","tag-imf","tag-international-monetary-fund","tag-our-finite-world"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22036","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22036"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22036\/revisions"}],"predecessor-version":[{"id":22037,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22036\/revisions\/22037"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}