Is the Great Recession Only the Beginning? Economic Contraction in an Age of Fossil Fuel Depletion and Ecological Limits to Growth

Abstract

The conventional explanation for the “Great Recession” is that a pro-business administration advanced deregulatory policies in the mortgage industry and broader financial industries, leading to a predictable but temporary economic recession. In contrast, peak oil analysts find a deeper root cause of the Great Recession. Secure and reliable access to cheap fossil fuels is fundamental to our industrial and post-industrial world, and the rising costs of fossil fuels due to post-peak depletion in the face of escalating demand make difficult the realization of economic growth. However, as individuals, companies, and lawmakers insist upon continued economic growth, these actors pressure lawmakers to endorse riskier and more shortsighted techniques aimed at extending domestic and global economic growth a little bit longer. The Great Recession can be understood in part as a consequence of US consumption of massive quantities of petroleum at a moment in history during which global oil production approached and surpassed its peak.

Notes

¹ Quote is from an art installation by Kurt Vonnegut entitled “Confetti: Prints by Kurt Vonnegut Jr.” For more on it, see < http://www.nuvo.net/indianapolis/words-in-pictures/Content?oid=1207435>.

² James Howard Kunstler, The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century, 1st ed. (New York: Atlantic Monthly Press, 2005).

³ Richard Heinberg, The End of Growth: Adapting to Our New Economic Reality (New York: New Society Publishers, 2011).

⁴ Paul Gilding, The Great Disruption: Why the Climate Crisis Will Bring on the End of Shopping and the Birth of a New World (New York: Bloomsbury Press, 2011).

⁵ John Michael Greer, The Long Descent: A User's Guide to the End of the Industrial Age (Gabriola Island, BC Canada: New Society Publishers, 2008).

⁶ Jared M. Diamond, Collapse: How Societies Choose to Fail or Succeed, Revised (New York: Penguin (Non-Classics), 2011).

⁷ Michael C. Ruppert, Confronting Collapse: The Crisis of Energy and Money in a Post Peak Oil World (White River Junction, VT: Chelsea Green Publishing, 2009).

⁸ Joseph A. Tainter, The Collapse of Complex Societies, 1st ed. (New York: Cambridge University Press, 1990).

⁹ Richard Heinberg, Peak Everything: Waking up to the Century of Declines (Gabriola Island, BC Canada: New Society Publishers, 2007), p. 141.

¹⁰ Richard Heinberg, Peak Everything: Waking up to the Century of Declines (New Society Publishers, 2007), p. 141

¹¹ Richard Heinberg, “Temporary Recession or the End of Growth?” (2009), < http://www.postcarbon.org/article/40503-temporary-recession-or-the-end-of>.

¹³ Thomas L. Friedman, “The Earth Is Full,” The New York Times, June 7, 2011.

¹² Thomas L. Friedman, “The Inflection Is Near?,” The New York Times, March 8, 2009.

¹⁴ Colin J. Campbell and Jean H. Laherrère, “The End of Cheap Oil,” Scientific American, March 1998, pp. 78–83.

¹⁵ Tim Appenzeller, “End of Cheap Oil,” National Geographic Magazine, June 2004.

¹⁶ George W. Bush, “President Bush's State of the Union Address,” Washington, DC, January 31, 2006, < http://www.washingtonpost.com/wp-dyn/content/article/2006/01/31/AR2006013101468.html>.

¹⁷ Klaus S. Lackner and Jeffrey D. Sachs, “A Robust Strategy for Sustainable Energy,” Brookings Papers on Economic Activity 2 (2005), pp. 215–269.

¹⁸ Stanford University political scientist Terry Lynn Karl has appeared in numerous peak oil documentaries, including Crude Impact and Crude Awakening. Colorado State University professor Kyle Saunders co-founded The Oil Drum, one of the major websites devoted to peak oil matters.

¹⁹ Charles A.S. Hall and John W. Day, “Revisiting the Limits to Growth after Peak Oil,” American Scientist 97:3 (May/June 2009); Richard Heinberg, The Party's Over: Oil, War and the Fate of Industrial Societies, 2nd ed. (Gabriola Island, BC: New Society Publishers, 2005).

²⁰ Heinberg, Party's Over, p. 21.

²¹ Paul Simon, "Have a Good Time," from Still Crazy After All These Years (Columbia, 1975).

²² Dale Allen Pfeiffer, Eating Fossil Fuels: Oil, Food and the Coming Crisis in Agriculture (Gabriola Island, BC, Canada: New Society Publishers, 2006); Evan D.G. Fraser and Andrew Rimas, Empires of Food: Feast, Famine, and the Rise and Fall of Civilizations, 1st ed. (New York: Free Press, 2010); Julian Cribb, The Coming Famine: The Global Food Crisis and What We Can Do to Avoid It, 1st ed. (Berkeley, CA: University of California Press, 2010).

²³ Heinberg, End of Growth, pp. 155–187.

²⁴ Marion King Hubbert, Nuclear Energy and the Fossil Fuels “Drilling and Production Practice” (San Antonio, TX: American Petroleum Institute, 1956), pp. 22–27; Kenneth S. Deffeyes, Beyond Oil: The View from Hubbert's Peak, 1st ed. (New York: Hill and Wang, 2005); Kenneth S. Deffeyes, Hubbert's Peak: The Impending World Oil Shortage (Princeton, NJ: Princeton University Press, 2001).

²⁵ Heinberg, End of Growth, p. 109.

²⁶ Angel Gonzalez, “Exxon Unveils Big Finds in Gulf,” The Wall Street Journal, June 9, 2011; Reuters, “Exxon Predicts Big Yields from Oil and Gas Finds in Gulf,” The New York Times, June 8, 2011.

²⁷ Joe Romm, “After Exxon Finds a Month's Worth of Oil in Gulf, G.O.P. Rep. Claims It Proves We Have ‘Abundant’ Oil Reserves,” Climate Progress, June 9, 2011, < http://thinkprogress.org/romm/2011/06/09/240562/exxon-finds-oil-gulf-gop-abundant-reserves/>; Kevin Drum, “Yes, We're Still Running Out of Oil,” Mother Jones (June 2011), < http://motherjones.com/kevin-drum/2011/06/yes-were-still-running-out-oil>; Russell Gold and Angel Gonzalez, “Exxon Struggles to Find New Oil,” The Wall Street Journal, February 16, 2011.

²⁸ Heinberg, End of Growth, pp. 110–111.

²⁹ Heinberg, End of Growth, 112, 118; Charles A.S. Hall, Stephen Balogh, and David J. R. Murphy, “What is the Minimum EROI that a Sustainable Society Must Have?,” Energies 2 (2009), pp. 25–47.

³⁰ Heinberg, End of Growth, pp. 112, 118; Hall, Balogh, and Murphy, “What is the Minimum EROI that a Sustainable Society Must Have?,” pp. 25–47.

³¹ Campbell and Laherrère, “End of Cheap Oil,” pp. 78–83.

³² Michael Lynch, “‘Peak Oil’ Is a Waste of Energy,” The New York Times, August 25, 2009.

³³ Hubbert, Nuclear Energy and the Fossil Fuels “Drilling and Production Practice,” pp. 22–27.

³⁴ Deffeyes, Hubbert's Peak: The Impending World Oil Shortage, p. 149.

³⁵ Lynch, “‘Peak Oil’ is a Waste of Energy.”

³⁶ Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power (New York: Free Press, 2008).

³⁷ Ronald Bailey, “Peak Oil Panic,” Reason Magazine, May 2006.

³⁸ David Goodstein, Out of Gas: The End of the Age of Oil (New York: W.W. Norton & Company, 2004).

³⁹ Campbell and Laherrère, “End of Cheap Oil,” pp. 78–83.

⁴⁰ Matthew R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, 1st ed. (Hoboken, NJ: Wiley, 2005).

⁴¹ Deffeyes, Beyond Oil; Deffeyes, Hubbert's Peak.

⁴² Goodstein, Out of Gas.

⁴³ John Vidal, “WikiLeaks Cables: Saudi Arabia Cannot Pump Enough Oil to Keep a Lid on Prices,” The Guardian, February 8, 2011.

⁴⁴ Lackner and Sachs, “Robust Strategy for Sustainable Energy,” pp. 215–269.

⁴⁵ John M. Broder, “Obama Shifts to Speed Oil and Gas Drilling in U.S.,” The New York Times, May 14, 2011.

⁴⁶ Peter Dauvergne, The Shadows of Consumption: Consequences for the Global Environment (Cambridge, MA: The MIT Press, 2008); Allan Schnaiberg, The Environment: From Surplus to Scarcity (New York: Oxford University Press, 1980).

⁴⁷ Michael T. Klare, “The Planet Strikes Back,” Salon.com, April 14, 2011, < http://www.salon.com/news/politics/war_room/2011/04/14/japan_fukushima_environment_obama>.

⁴⁸ Ş İlgü Özler and Brian K. Obach, “Capitalism, State Economic Policy and Ecological Footprint: An International Comparative Analysis,” Global Environmental Politics 9:1 (February 2009), pp. 79–108; Dauvergne, Shadows of Consumption; Schnaiberg, Environment.

⁴⁹ Heinberg, Peak Everything.

⁵⁰ Julia Whitty, “The Last Taboo,” Mother Jones (May/June 2010); Andrew R.B. Ferguson, “Population and the Demise of Cheap Energy,” Politics and the Life Sciences 20:2 (2001), pp. 217–226.

⁵¹ For example, see Heikki Patomaki, “Neoliberalism and the Global Financial Crisis,” New Political Science 31:4 (2009), pp. 431–442; Paul Mattick, Business as Usual: The Economic Crisis and the Failure of Capitalism (London: Reaktion Books, 2011); Paul Mattick, “Capitalism's Dismal Future,” The Chronicle of Higher Education, March 13, 2011, The Chronicle Review; Peter Custers, “The Tasks of Keynesianism Today: Green New Deals as Transition Towards a Zero Growth Economy?,” New Political Science 32:2 (2010), pp. 173–191; Clive Ponting, A New Green History of the World: The Environment and the Collapse of Great Civilizations, Revised and Updated (New York: Penguin (Non-Classics), 2007); Herman E. Daly and Joshua Farley, Ecological Economics: Principles and Applications, 2nd ed. (Washington, DC: Island Press, 2010); Herman E. Daly and Kenneth N. Townsend, Valuing the Earth: Economics, Ecology, Ethics, 2nd ed. (Cambridge, MA: The MIT Press, 1993).

⁵² D.H. Meadows, D.L. Meadows, and Jorgen Randers, Beyond the Limits: Confronting Global Collapse, Envisioning a Sustainable Future (Post Mills, VT: Chelsea Green Publishing Company, 1993); D.H. Meadows, Jorgen Randers, and D.L. Meadows, Limits to Growth: The 30-Year Update, 3rd ed. (White River Junction, VT: Chelsea Green, 2004); Paul R. Ehrlich, The Population Bomb (New York: Ballantine Books, 1968); D.H. Meadows, D.L. Meadows, and William W. Behrens III, The Limits to Growth: A Report for the Club of Rome's Project on the Predicament of Mankind (New York: Universe Books, 1972).

⁵³ Ugo Bardi, The Limits to Growth Revisited, 1st ed. (New York: Springer, 2011); Hall and Day, “Revisiting the Limits to Growth After Peak Oil”; Meadows, Randers, and Meadows, Limits to Growth.

⁵⁴ David Harvey, “Population, Resources, and the Ideology of Science,” Economic Geography 50:3 (1974), p. 271.

⁵⁵ Bardi, Limits to Growth Revisited; Hall and Day, “Revisiting the Limits to Growth after Peak Oil”; Meadows, Randers, and Meadows, Limits to Growth.

⁵⁶ Tony Wrigley, “Opening Pandora's Box: A New Look at the Industrial Revolution,” VoxEU.org (2011), < http://www.voxeu.org/index.php?q = node/6781>.

⁵⁷ Bardi, Limits to Growth Revisited; Hall and Day, “Revisiting the Limits to Growth after Peak Oil”; Meadows, Randers, and Meadows, Limits to Growth.

⁵⁸ See the following blog, which references a May 4, 2009, report from Raymond James & Associates that argues that world oil production peaked in July 2008: Keith Johnson, “Peak Oil: Global Oil Production's Peaked, Analyst Says,” Environmental Capital: Daily Analysis of the Business of the Environment by The Wall Street Journal, May 4, 2009, < http://blogs.wsj.com/environmentalcapital/2009/05/04/peak-oil-global-oil-productions-peaked-analyst-says/>. In a follow-up interview, report author Marshall Adkins of Raymond James & Associates stated that “most of the investment community gets it” and that “everyone in the industry knows it. I think a lot of analysts are reticent to call a spade a spade.” See Steve Andrews, “Interview with Marshall Adkins,” Association for the Study of Peak Oil & Gas—USA, July 20, 2009, < http://www.aspousa.org/index.php/2009/07/interview-with-marshall-adkins/>.

⁵⁹ Brianna Panzica, “Commodities Will Increase, Says Goldman Sachs,” Energy & Capital, July 7, 2011, < http://www.energyandcapital.com/articles/commodities-will-increase-says-goldman-sachs/1626>.

⁶⁰ Elisabeth Rosenthal, “U.S. Military Orders Less Dependence on Fossil Fuels,” The New York Times, October 4, 2010; Christine Parthemore and John A. Nagl, Fueling the Future Force: Preparing the Department of Defense for a Post-Petroleum Era (Center for a New American Security, September 27, 2010), < http://www.cnas.org/node/5023>; Amanda Little, Power Trip: From Oil Wells to Solar Cells—Our Ride to the Renewable Future, 1st ed. (New York: Harper, 2009).

⁶¹ Andrews, “Interview with Marshall Adkins.”

⁶² Andrews, “Interview with Marshall Adkins.”

⁶³ Vidal, “WikiLeaks Cables.”

⁶⁴ Simmons, Twilight in the Desert.

⁶⁵ Quoted in Friedman, “Earth is Full.”

⁶⁶ Naomi Oreskes and Erik M. Conway, Merchants of Doubt: How a Handful of Scientists Obscured the Truth on Issues from Tobacco Smoke to Global Warming, 1st ed. (New York: Bloomsbury Press, 2010); Al Gore, “Climate of Denial,” Rolling Stone Magazine, June 22, 2011.

⁶⁷ Tali Sharot, The Optimism Bias: A Tour of the Irrationally Positive Brain (New York: Pantheon Books, 2011).

⁶⁸ Eric Biber, “Which Science? Whose Science? How Scientific Disciplines Can Shape Environmental Law” (presented at the Law & Society Association Annual Meeting, San Francisco, CA, 2011).

⁶⁹ Lynch, “‘Peak Oil’ is a Waste of Energy”; Bailey, “Peak Oil Panic”; Dan Gardner, Future Babble: Why Expert Predictions Are Next to Worthless, and You Can Do Better (New York: Dutton Adult, 2011).

⁷⁰ Peter G. Brown and Geoffrey Garver, Right Relationship: Building a Whole Earth Economy, 1st ed. (San Francisco, CA: Berrett-Koehler Publishers, 2009); Lester R. Brown, Plan B 4.0: Mobilizing to Save Civilization, Substantially Revised (New York: W.W. Norton & Company, 2009); Joseph A. Schumpeter, Capitalism, Socialism, and Democracy, 3rd ed. (New York: Harper Perennial, 1962).

⁷¹ Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (New York: Holt Paperbacks, 2002).

⁷² James D. Hamilton, Causes and Consequences of the Oil Shock of 2007–08 (Washington, DC: Brookings Papers on Economic Activity, Spring 2009), < http://www.brookings.edu/economics/bpea/∼/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pdf>.

⁷³ James D. Hamilton, Causes and Consequences of the Oil Shock of 2007–08 (Washington, DC: Brookings Papers on Economic Activity, Spring 2009), < http://www.brookings.edu/economics/bpea/∼/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pdf>

⁷⁴ James D. Hamilton, Causes and Consequences of the Oil Shock of 2007–08 (Washington, DC: Brookings Papers on Economic Activity, Spring 2009), < http://www.brookings.edu/economics/bpea/∼/media/Files/Programs/ES/BPEA/2009_spring_bpea_papers/2009_spring_bpea_hamilton.pdf>

⁷⁵ Vidal, “WikiLeaks Cables”; Simmons, Twilight in the Desert.

⁷⁶ Hamilton, Causes and Consequences of the Oil Shock of 2007–08, p. 10.

⁷⁷ Hamilton, Causes and Consequences of the Oil Shock of 2007–08, 2.

⁷⁸ Motoko Rich and Stephanie Clifford, “In Consumer Behavior, Signs of Gas Price Pinch,” The New York Times, May 17, 2011.

⁷⁹ Heinberg, “Temporary Recession or the End of Growth?”

⁸⁰ Heinberg, End of Growth, pp. 32–33.

⁸¹ Gilding, quoted in Friedman, “Inflection is Near?”

⁸² Friedman, “Inflection is Near?”

⁸³ Quoted in Friedman, “Inflection is Near?”

⁸⁴ Friedman, “Inflection is Near?”

⁸⁵ Rob Hopkins, The Transition Handbook: From Oil Dependency to Local Resilience (Totnes, Devon, UK: Chelsea Green, 2008); Heinberg, End of Growth; Richard Heinberg and Daniel Lerch, The Post Carbon Reader: Managing the 21st Century's Sustainability Crises (Berkeley, CA: University of California Press, 2010); Kunstler, Long Emergency.

⁸⁶ Eric Cazdyn and Imre Szeman, After Globalization, 1st ed. (Malden, MA: Wiley-Blackwell, 2011).

⁸⁷ Hopkins, Transition Handbook.

⁸⁸ Heinberg, End of Growth, p. 7.

⁸⁹ Heinberg, “Temporary Recession or the End of Growth?”