What a Year 2024 Was

How energy and resource depletion undermined the post WWII world order and democracy

Photo by Micah Williams on Unsplash

It is the end of the year, and it’s time to look back at what happened throughout 2024. This is by no means a comprehensive analysis, although it would love to be one. So many things have happened that it is nigh on impossible to summarize them in one article, yet here I am trying to paint a big picture on world events. Future generations, I’m sure, will be busy debating what has happened in the 2020's in general and in 2024 in particular. Instead of quoting Lenin, though (a misattribution by the way), let me cite fantasy author David Eddings’ words to illustrate what we are going through:

“Centuries pass when nothing happens, and then in a few short years events of such importance take place that the world is never the same again.”

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First, some background

Let’s start with the basics driving all this upheaval around the world: energy. Industry, (geo)politics and the economy are all functions of affordable energy, and that practically means fossil fuels. Like it or not, we live in a self-destructing economic paradigm, where all of our essential technologies — from concrete to iron and steel, or from fertilizers to plastic and transport fuels — are solely based on high carbon-density fuels. Despite causing climate and ecological mayhem — as well as being very much finite — industrial civilization remains hopelessly dependent on them. Bad news is, that no proposed alternative so far has proved to have the potential to take their place soon enough and at an adequate scale to prevent both an economic and ecological collapse.

Simply put: there is no such thing as an “energy transition”. It’s a myth. All proposals, from wind and solar to hydrogen, depend on minerals mined, delivered and refined by using these polluting fuels in copious amounts. As soon as the extraction of fossil fuels begin to decline, you can bet that the production of solar panels and wind turbines will eventually follow suit. And since diesel fuel is also used to grow and deliver crops, the question whether to burn it to mine minerals for EV batteries, or use it to grow food to prevent hunger will resolve itself rather quickly. And only when you add our propensity for war whenever resources grow thin, you start to really appreciate the relative peace and calm we have today.

World oil production (measured in terawatt-hours). Notice how we could’ve surpassed today’s production figures in 1980 already, were it not for a finite resource on a finite planet (and how we would have been baked crisp in a +5°C world by now). Prediction (dashed line) is based on Rystad’s realistic oil production scenario (where total liquid fuel output peaks in 2030 at 108 million barrels per day and declines to 55 million barrels per day in 2050), resulting in a rate of decline between 3.5 and 4.5% annually. Data source: Our world in data, Rystad Energy

World oil production is on a high, bumpy plateau since 2015, with the highest ever daily crude oil output reached in November 2018. Long gone are the days of 7% annual growth, making the economic miracle of the 1950’s and 1960’s possible. Gone are the days of 1.4% growth, too, making the credit fueled expansion of the 1980’s and 1990’s a thing. For good or bad we cannot expect to see the return of oil production growth next year either… In fact, most likely we will remain on this petroleum highland for a few more years, then as the energy cost of oil production keeps increasing, and as more and more oil fields go out of business, a slow but accelerating decline can be expected to take place.

Oil, and fossil fuel production in general, is experiencing an affordability crisis driven by a relentless cost increase on the supply side (caused by the depletion of cheap and easy to access fields), and the increasing inability of people buying more stuff delivered to them on the back of oil products. In short: oil has slowly become too expensive for customers, and at the same time, too cheap to justify extracting more of it. Welcome to the end of the oil age, and with it the slow decline of industrial civilization. I know it’s very hard to believe, but the turning point from centuries of growth to permanent contraction might has just arrived as we hit this civilizational tipping point.

As long time readers already know by heart: energy is the economy. No energy, no economy. No economy, no political/military power. It is that simple. This is why Luxembourg is not the capital of Europe, despite having the highest GDP per capita (more than twice that of Germany). Contrary to common misconceptions GDP is not a measure of economic output. It is a measure of financial transactional activity: wages payed, investments made, financial, managerial, healthcare services provided etc.. Hence the outrageous GDP figures of Luxembourg, a banker’s paradise in Europe. GDP is also easily distorted by taking on debt, as pointed out by Tim Morgan in every one of his articles. Printing money, however, is a poor substitute for making goods and growing food. As he explains:

“Those who understand the critically-important concept of the two economies will recognize this process as a rapid divergence between the “real” economy (of material products and services) and the parallel “financial” economy (of money, transactions and credit).

We’re now very close to the point at which this self-deception ceases to convince. Globally, debt — and government debt in particular — is growing at rates so unsustainable as to lead inexorably to the monetization (“printing”) of debt, and a precipitate slump in the purchasing power of money.

The reality of higher-than-reported inflation has broken through as the “cost of living crisis” which continues to undermine political cohesion around the World.

This inflationary trend is weighted towards the costs of necessities, so has had a particularly adverse effect on people at the lower end of the income scale, who have to spend a large proportion of their incomes on staples.

At the same time, the ultra-low rates necessary to prop up the illusion of continuity have inflated asset prices dramatically, to the disproportionate benefit of an already-wealthy minority.”

The 2008 financial crisis was not an exception, and its root causes haven’t gone away either. The housing, debt and stock market bubble has just kept growing and growing ever since. Many banks are sitting on a heap of unrealized losses and struggle to stay solvent. The great financial crisis was thus a mere harbinger of things to come: an even more severe and drastic financial meltdown, a ticking time bomb, which no one knows when will explode. Maybe next year? Or the year after? Or as late as 2030? One thing is for sure: we are on an accelerating path towards a sudden downturn — a true Seneca Cliff — with a potential to end global civilization as we know it in a matter of decades. Of course many things are possible in the future, and this is just the worst case scenario. One thing is for sure: we (especially in the West) are past our peak and must contend with a long decline. Growth is no longer an option.

Photo by Taylor Floyd Mews on Unsplash

Political Implications

I find it harder and harder to talk about the real life implications of energy and resource depletion without addressing the hot mess people call ‘politics’ downstream to it. Keep in mind, though, that state affairs are just theater, an emotional roller coaster ride designed to manufacture consent for more war, and to divert your attention away from the obscene levels of social inequality and the terrifying levels of ecological destruction. And what did our corporate-oligarchic elite — infesting both sides of the political divide — do while you were not watching? They have demolished what little remained of our democratic institutions, and used their media apparatus to hypernormalize even the weirdest of things happening (or just bury them under a pile of irrelevant manure).

None of this will be terribly relevant to later generations, though. Sure, it will be interesting to learn and talk about these events around the campfire while staring at the moonlit ruins of skyscrapers, but in the grand scheme of things it will not matter.

Humanity is in overshoot: consuming way more mineral and natural resources than what could be normally regenerated, while releasing much more pollution than what could be safely absorbed. And as the prime energy resource (oil) powering it all approaches its affordability limit, so will the human enterprise succumb to the mounting ecological pressures threatening to bring us back into balance by force. The lack of freshwater, peak fish, peak agricultural land, climate change, chemicals causing birthrates to collapse, untreatable diseases, mass extinction of species and much more were so far hidden by technology and the massive productivity gains it offered. Without cheap fuels and minerals, though, it will be no longer possible to hide the dire reality of our fragile existence. In fact, after examining our biophysical realities, we must say: becoming hunter gatherers (again) in the centuries / millennia ahead would actually be the best possible outcome. In fact, pulling it off would be quite a feat, even as sea levels rise, forests burn, species go extinct and pollution reigns supreme.

Viewed in the context of overshoot and the utter unsustainability of industrial civilization, the 2020’s were just the beginning of the great unraveling, caused by the last ravages of the mind virus: Wetiko. By the time the dust settles many decades into the future, high tech civilization will be gone forever and it will not matter who won which battle and where. This is not a story where one side wins, the other loses and people live happily after. Life is going to be extremely hard without this much technology, and ultimately it will not matter which team you rooted for (if any). So treat the following list of events lightly, and always keep the larger context in mind:

• Trump won the election after multiple attempts on his life (one of which almost got through).

• Governments of the two largest EU economies fell in quick succession: first in France, then in Germany. In both cases (beyond the usual political theater) one can find deficit spending and a collapsing real economy as root causes for their malaise.

• Elections got annulled in Romania on dubious claims; but not independent from the fact that an alternative candidate had a significant chance of winning it. So much for democracy.

• Moldova and Georgia, two countries outside the EU (and with significant number of Russian residents as well as expats living in Russia), experienced a massive pressure campaign from the EU to elect a pro-western leader. In the case of Moldova, they succeeded, and no protests, sabotage, or anything similar followed. In case of Georgia, following an election where no outside interference has been proved so far and which a pro-independence party won by a huge margin, revolts were “spontaneously” organized, the French born president failed to step down peacefully and the country was hit by sanctions.

• The Syrian state collapsed in an insurgency led by western backed “moderate rebels”. With it the Axis of Resistance led by Iran has also came to an end, with Russian military presence in the country likely to follow suit.

• The South Korean president has launched a failed coup against his own parliament, and planned to start a limited war with North Korea (together with sending even more weapons and troops to Ukraine to fight alleged North Korean soldiers there).

• After crossing all possible red lines, Russian territory (in Kursk of all places) was invaded by a NATO trained, armed and led force (containing French, Polish, English and Romanian elements) presumably to capture the nuclear power plant there. A few months later, long range missiles were lobbed on Russian territory — based on western satellite intelligence and with the help of NATO personnel programming targeting data into these armaments (1).

• In response to these events, the Yuzhmash missile factory and armored vehicle maintenance site in Dnipro, Ukraine was hit by an entirely new hypersonic weapon, the Oreshnik (a road mobile rocket-system with a range of 5500 km and a speed of 10–12 Mach).

• Both Russia and Europe, as a result of these escalations, warned their citizens to prepare for a hot war in the coming years.

• Last week, a high ranking general in Moscow was assassinated. Who, by the way, was collecting hard evidence on Western military involvement in biological and chemical warfare labs and activities from Syria to Ukraine.

• The incoming US president has threatened Greenland, Panama, and Mexico with taking control over their territories / assets, and called Canada the 51st state.

Viewed in the larger context of energy and resource depletion what we have here is not an isolated war in Europe or the Middle East between a country and its neighbors, or some random political events around the world, but a global war between western and Eurasian powers waged on many fronts. All the states listed above are either directly in the front line or closely supporting the warring parties in a worldwide struggle for dominance, and ultimately for control over finite resources and critical shipping routes. Anyone trying to explain any of these events as a morality play with good and bad characters, or as one country invading another clearly do not know what they are talking about.

Resource and energy depletion has started to effect the world economy rather badly. It’s impacts were not evenly distributed, though. It hurt importing nations, like those of Europe, the worst as exporters tended to prioritize serving their own markets first. And since Europe and North America were the first to industrialize, they were also first in burning through all of their easy-to-get resources at home. Two world wars and an oil fueled economic miracle later these once resource rich nations have all ran into their respective limits to growth. As first coal then oil production started to show signs of weakness in the 1970's, deindustrialization begun throughout the entire West, import dependence started to grow and a debt and stock market bubble began to inflate.

The industrial revolution was never more than a flash in the pan, something which is not panning out well for its place of origin.

Over time these multidecade long processes have created a massive vulnerability for western economies. Now, a desperate scramble is on to get more physical assets to back up the immense amount of monetary claims (represented by stocks and bonds) made on future production of goods and services; none of which could be honored on a rapidly falling economy running out of fossil fuels. Hence the global struggle for mining rights, oil and gas patches, shipping canals, agricultural land, or the push for removing any red tape or moral qualms preventing investors from exploiting these riches.

In the meantime, at home, discontent with the ruling elite is growing ever larger, culminating in the reactions to the healthcare CEO murder. No political party is willing to (or able to) exploit this anger, though, without risking to be banned or prevented from taking power by the owner-oligarch-class (to which the aforementioned CEO belonged). Instead, western politicians, remain fully occupied with infighting among each other, inciting political violence (resulting in assassination attempts among other things). Preoccupied with a vie for power at home and a fight for collateral abroad, western elites remain blindsided to the risks of growing inequality at home and the limits to their power. As Peter Turchin observed in his book End Times:

“When the equilibrium between ruling elites and the majority tips too far in favor of elites, political instability is all but inevitable”

This is not to say that all is fine in Eurasia. Their economies, just like those of the West, are also running on finite resources — the production of which might have already peaked (coal in China, and oil in Russia). Their population, too — just like those of western states — have already started to decline. And although their economies are still growing, they will inevitably experience stagnation and decline in the years and decades ahead. There is no infinite growth on a finite planet, no matter where you live. There is a world of difference though between an export oriented country (such as China) which can produce more than enough to meet its needs (and which can trade with others to get what it doesn’t have), and a massively import dependent, overfinancialized, heavily indebted group — such as the G7 nations. No wonder, that there is a palpable sense of desperation there.

In order to prevent their loss of clout in world affairs, western states have started push too many things, in too many places, all at once; hoping that they can find a weak spot (again, just look at the list above). And even though they sometimes find one (such as it’s the case with Syria, which fell surprisingly fast), exploiting it will inevitably make things worse: potentially dragging America and its allies into another major war, overextending them even further. Make no mistake, it might have been possible to pull this off thirty or fifty years ago, but in their present (advanced) state of economic, moral, social and political decline — ultimately driven by the steady erosion of low-cost energy resources turbocharged with corporate greed — this policy will soon prove to be impossible to continue with.

Contrary to the facts on the ground, the West remains completely incapable to comprehend that they’ve irretrievably lost dominance over the rest of the world. The Rest of the World, on the other hand, is still reluctant to recognize that they are next on the chopping block as cheap energy and resources run out… Again, nothing personal. This is how the collapse of industrial civilization looks like, and it had to start somewhere. Again, denying that we are running out of affordable energy and resources — or that we are in overshoot — won’t make these things go away. Only global cooperation could prevent the worst outcomes, but in our present state of polarization, populist leaders popping up everywhere, and oligarchs becoming more reckless than ever, I doubt that we are looking at a peaceful transition into a localized, regenerative economy.

So what comes in 2025, based on all this? Well, that is going to be the subject of the second part of this essay.

Until next time,

B

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Notes:

(1) For context: just imagine the reaction of U.S. officials at the height of the Cuban missile crisis in 1962 receiving news of multiple launches of non-nuclear missiles against Florida… All supplied and programmed by soviet military personnel — after Chinese mercenaries were caught fighting and killing civilians in Sarasota County in a retaliatory move after the Bay of Pigs invasion. Perhaps its no exaggeration to say that not a single shack would have been left standing on the Caribbean island in return.