A very dubious energy forecastThis is a “the sky is going to fall tomorrow” forecast, pure gloom and doom. If anything like this forecast comes to pass, you should perhaps sell all your investments, buy yourself a small house in the woods, board up your windows, stock up on food and ammunition, get yourself a fence with barbed wire, and prepare yourself for a virtual collapse of civilization that will play out over the next ten years.
Tverberg puts it this way: “My expectation is that the situation will end with a fairly rapid drop in the production of all kinds of energy products and the governments of quite a few countries failing. The governments that remain will dramatically cut services.”
What is interesting is that last year BP released an energy forecast that is basically the opposite of Tverberg's forecast. Here is a graph from page 14 of that forecast. It covers exactly the same period, and plots the same thing that Tverberg is plotting. But it tells an entirely different story.
BP's Energy Production Forecast
The stories told by these forecasts are as different as night and day. Tverberg predicts that energy production will start collapsing next year, and that it will plummet from about 13 billion tons of oil equivalent (toe) to about 3 billion tons by the year 2030. BP predicts that energy production will rise from about 13 billion tons to about 16 billion tons by the year 2030.
The following visual illustrates the difference between the forecasts (the man is falling off a cliff):
Who is right here? I suspect that the BP forecast is over-optimistic. But I can't put any credence in Tverberg's estimate. Her graph is ridiculously suspicious looking. Her graph shows every single type of energy production increasing until next year, at which point every type of energy production starts dropping like a stone from a cliff. Can we really believe that this will coincidentally happen all in the same year? And what possible reason could we have for thinking that 5 types of energy production will all suddenly reverse their current upward trend next year?
In this post Tverberg offers this explanation for why the main energy forecasts differ radically from her forecast: “Governments are paying for reports such as the EIA and IEA forecasts, and oil companies are paying for forecasts such as those by BP, Shell, and Exxon-Mobil. Both governments and oil companies prefer reports that say that everything will be fine for the foreseeable future.” But if all of these forecasts are unreliable, that would seem to imply there is no basis for any forecast, including a gloomy one like Tverberg's.
Tverberg doesn't provide any data backing up her super-gloomy graph, so it is hard to take it very seriously. My own prediction is that natural gas production and renewable energy production will continue to increase over the next fifteen years, that nuclear production will not change much over that period, that coal production will probably not change much over that period (perhaps declining very significantly after 2030), and that the only energy source that may very significantly decline over the next fifteen years may be oil. I think if we do reach peak oil, and oil production starts declining, it will only decline at an annual rate of about 3%, less than half of the enormous decline rate of about 7% or 8% predicted by Tverberg's graph. Mankind faces huge energy problems around mid-century, but I see little chance that we will have huge declines in overall energy production in the next fifteen years. Like the debt and deficit problem, our energy problem is a long-term problem, not something that has much of a chance of exploding in our faces in the next few years.