Skip to main content

Energy Costs Rising as National Debts Grow

Although gas prices are temporarily low at the pump, long-term energy costs are on the rise. According to State of the World 2015 contributing author Nathan John Hagens, a former hedge fund manager who teaches human macro-ecology at the University of Minnesota, nations are papering over those costs with debt. Higher energy costs are leading to continued recessions, excess claims on future natural resources, and more-severe social inequality and poverty (www.worldwatch.org).

The relatively low cost of energy extraction has been perhaps the most important factor in the industrialized world's economic success. Historically, large quantities of inexpensive fuels were available even after accounting for the energy lost to extract and process them. But, as remaining fuels become less accessible, higher energy costs will have ripple effects through economies built around continued large energy-input requirements. Rising costs will endanger highly energy---   intensive industries and practices-including the energy sector itself---   as well as widen and deepen poverty as everything becomes more expensive.

"Despite having 'plenty of energy,' higher physical costs [of extraction] suggest that energy likely will rise from a historical average of 5 percent of GDP [gross domestic product], to 10--- 15 percent of GDP or higher," writes Hagens.

In the short term, nations are taking on growing debt to avoid losses in GDP---   an indicator of the economic health of a country. Since 2008, the Group of Seven nations (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) have added about $1 trillion per year in nominal GDP, but only by increasing their debt by over $18 trillion.

However, continued use of credit to mask the declining productivity of energy extraction is unsustainable. For each additional debt dollar, less and less GDP is generated, and, at the same time, our highest-energy-gain fuels are being depleted. Energy is becoming more expensive for the creditor in the future than for the debtor in the present.

"We have entered a period of unknown duration where things are going to be tough," writes Hagens. "But humanity in the past has responded in creative, unexpected ways with new inventions and aspirations." While policy choices such as banking reform, a carbon and consumption tax, and moving away from GDP as a proxy for well-being are good long-term ideas, "we urgently need institutions and populations to begin to prepare...for a world with the same or less each year instead of more."

Worldwatch's State of the World 2015 investigates hidden threats to sustainability, including economic, political, and environmental challenges that are often underreported in the media. For more information on the project, visit http://www.worldwatch.org/state-world-2015-confronting-hidden-threats-sustainability-0.
 
http://www.worldwatch.org/

Comments

Popular posts from this blog

The Battle of the Blogs? Whitlock goes to War...

Good day folks, you're all in for a bit of a treat as it happens, so I hope you're sitting comfortably. Before I go any further, I should issue a 'long read' warning. This blog piece is going to be fairly long, quite involved in its detail, but hopefully very enjoyable if you despise and detest climate change denial, as I do. But first, an explanation of the circumstances.

The other day, on Twitter, I indulged in a bit of regular fun-poking at James Delingpole, as I often do because, quite simply, the man just invites it. For those not in the know, Delingpole is a pretty nasty character really. He writes regular blog pieces and op-eds for Breitbart and The Spectator, usually on climate change, but also on other subjects as well. He is usually, and seemingly, unashamedly vicious, as will become apparent in my coverage of him and his behaviour in this piece. Given his behaviour, I am not afraid, occasionally to indulge in a bit of 'ad-hominem' warfare myself, ind…

Array Technologies leads US market in solar tracker shipments

5 Companies and Their Efforts to Reduce the Environmental Impact of Manufacturing

By Rana Tarakji
The Industrial Revolution has undoubtedly affected the environment. From pollution to global warming, the environment has taken on a lot of the burden for many of the advancements that humans have enjoyed.
Unfortunately, the manufacturing industry is one of the biggest contributors to the significant damages and hazards on the environment. Manufacturing companies are among the biggest producers of solid, liquid, and gaseous wastes that lead to huge levels of pollution.
Although many manufacturing companies still do not have policies and practices in place to reduce their negative impact on the environment, there are many who are taking the lead to a more sustainable and environment-friendly approach.
Coca Cola When it comes to beverage manufacturers, Coca Cola is among the biggest around the world. They have started taking on a more responsible environmental commitment by making water preservation, sustainable packaging, and energy and climate protection among their goals.…