Our economy… and the global one.

Yesterday’s news was full of gloomy predictions of virtually no economic growth both globally and within the UK. Commentators, and ‘experts’ alike seemed at a loss to know why this is happening, especially when countries like the UK are following ‘expert’ advice.
However, I feel both mystified and frustrated by the ‘experts” perplexity.
In the summer of 2008, at the start of the global recession, what I was watching was the increasing price of oil on the world markets. The global demand for oil has grown alongside economic activity for many decades. There have been attempts to show that we can achieve economic growth without increased energy use, but the connection has never really been broken.
Indeed, recent recessions in the 1970s and the 1990s have coincided with tightness in the oil supply. Even back in the 1920s and 30s energy availability was a factor in the depression – though it was coal supply that was constrained, not oil. After the second world war, growth resumed as increasing supplies of oil began flowing from the US.
So ‘Why did the banks crash in 2008?’ The common answer is that borrowers began to default on those sub-prime loans. But no one seems to ask why the defaults occurred just then?
Isn’t the answer that as the oil price rose during 2008, more of people’s income – and businesses’ costs – went on fuel? As a result their ability to repay debt fell, and defaults began.
Like a child, let’s ask that ‘why’ question again: “Why did oil prices rise just then?” Previous highs in oil prices had occurred when supplies were constrained through political action (OPEC, 1970s) or war (Iraq, 1990s). There was nothing like this happening in 2008.
But the supplies were still constrained. As a finite resource, oil has to be found before it can be extracted. And each oil well, and oil-rich area, will have a pattern of oil flowing from it – starting from nothing, growing to a maximum and down again to nothing. Globally the same will be true. And there are more and more experts who say that the global maximum has either happened or will do soon.
So if I – and others who accept this scenario – are right, what do we need to do, locally, nationally and globally to get our economy back on an even keel?
Keeping the oil price down, will help stabilise the economy. The recent release of strategic oil reserves by the US, UK and others will have helped do this. But the long term solution to stable, lower oil prices will be to reduce our demand for oil to below the supply limit. We need to wean ourselves off oil.
Reducing our energy demand and investing in alternatives are the two key ways to do this. And the sooner we start the easier it will be.
It’s not rocket science, and many others have thought about this. For those new to this, the Transition Town movement and Colin Campbell’s Depletion Protocol are good places to start.
Meanwhile I’m looking forward to hearing what a no growth society might be like at the talk at the Quaker Meeting House in Derby on 24th September (7pm) by Mike Payne “Prosperity without Growth”.

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