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479. The Dawn of the Second Half of the Age of Oil.
This Newsletter has now been running for four years and has
covered almost 500 items of interest. It is accordingly
perhaps timely to look back and try to summarise what might
be learnt from the exercise. The Newsletter started in a
modest way with no particular mission, concentrating at
first on the more technical aspects of the matter. Later, it
came to cover various related geopolitical issues, some of a
sensitive nature. Gradually a picture began to fall into
place, which may be summarised as follows:

The Industrial Revolution opened in the mid 18th Century
with the exploitation of coal, initially in Britain,
providing a new fuel for industry, transport and trade,
which grew rapidly. The Oil Age dawned 100 years later,
initially to provide lamp-oil for illumination, but later to
fuel transport, following the development of the Internal
Combustion Engine. Electricity generation expanded widely,
fuelled first by coal, but later mainly from oil, gas and
nuclear energy. This epoch has been widely seen as one of
amazing technological progress, which has conditioned many
people to think that there must always be a technological
solution. The Industrial Revolution was accompanied by an
equally important, but less visible, Financial Revolution.
In short, commercial banks lent money in excess of what they
had on deposit, effectively creating money out of thin air,
but the system worked because tomorrow’s expansion provided
collateral for to-day’s debt. It was effectively a system of
confidence, an intrinsic element of all debt. So, it might
be better termed the Financial-Industrial Revolution. The
Stock Markets evolved from being simply an exchange of
dividend-yielding instruments to become largely speculative
institutions, being in turn stimulated by the tax regime
that gave preferential treatment to speculative gains. In
addition, World trading currencies, previously the pound
sterling and now the US dollar, delivered massive hidden
returns to the issuing countries, becoming in effect the
prime benefit of Empire. The World’s population expanded
six-fold exactly in parallel with oil, which provided much
of the fuel with which to plough the field, and bring food
and manufactured goods to market, thus indirectly supporting
the Financial System. The international of transport of food
reduced the risk of local famines when harvests failed for
climatic and other reasons. The Second Half of the Oil Age
now dawns and will be characterised by the decline of oil,
followed by gas, and all that depends upon these prime
energy sources. The actual decline of oil will be gradual at
less than three percent a year: such that the production of
all liquid hydrocarbons in 2020 will have fallen to
approximately what it was in 1990. In those terms, it does
not appear to be a particularly serious situation. But in
reality, it is a devastating development because it implies
that the oil-based economy is in permanent terminal decline,
removing the confidence in perpetual growth on which the
Financial System depends. Without the assumption of
ever-onward growth, borrowing and lending dry up: there
being little viable left to invest in. It follows that there
will be a need to remove vast amounts of so-called Capital,
which in fact was not Capital in the sense of being the
saved proceeds of labour, but merely an expression of
speculative confidence in ever onward economic growth. This
in turn leads to the conclusion that the World faces another
Great Depression, triggered more by the perception of long
term decline of the general economy rather than the actual
decline of oil supply itself which is gradual not
cataclysmic. The World is definitely not about to run out of
oil, but it does face the onset of decline having consumed
about half of what is readily available on the Planet. This
is not welcome news, and those with mindsets conditioned on
past experience find it very difficult to accept, some
becoming vituperative in their reaction.

 >In terms of pragmatic politics, it is virtually impossible
for Governments to plan and prepare with logical strategies
to face the new world that opens. Accordingly, the
transition will likely be a time of international tension
and resource wars of which the first salvoes have already
been fired. But some of the more philosophically inclined
wonder if in fact the post-oil world might not turn out to
be a more harmonious one for the survivors. There are indeed
hopes, Deus volens, that they may number somewhat more than
the Planet was able to support prior to what by then will be
seen to have been the brief Age of Oil, during which the
World consumed its inheritance of fossil sunshine.

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