Singapore Peak Oil

Dr. Larry Haverkamp writes a weekly financial column, AskDrMoney, in the Singapore tabloid The New Paper.

He seems to be aware of peak oil and our limits to growth. It's not often that one finds articles like these in the Singapore papers and even less so in a tabloid. Signs of the times?

May 27, 2008

The problem is demand from developing nations is real while the supply of resources may be more limited than we had thought. For example, there is no way to know if producing countries have all the oil reserves they claim. No Opec nation has ever permitted an independent audit of its oil fields.

Combine increasing demand with decreasing supplies and what do you get?

Disaster. Expect continuously rising prices, not just for oil but other natural resources as well.

What's worse is that higher prices are merely a reflection of resource shortages.

The world's economies need food, fuel and minerals to operate. Even the most clever technology cannot produce output without inputs.

If resources eventually decline to zero in a few generations, output will also fall to zero.

Then, we will revert to subsistence living, like sophisticated cavemen. Call us the Cro-Magnon smarties. Full Article

July 01, 2008

We saw something like this in 1973 and again in 1982. The US was hit with an oil shortfall, which resulted in both recession and inflation, called stagflation. It spread to Singapore and around the world.

In hindsight, it seems overblown, since everything turned out okay. Prices shot up, then they came down. Growth slowed, then it picked up.

Prosperity returned, as it always does. If it didn't, you would have a permanent recession. The notion is so absurd that no economist in their right mind would even consider it. So I will.

In a worse-case scenario, permanent recession hits and each generation becomes poorer than the last. Gross domestic product (GDP) declines continuously. It eventually hits zero and we return to subsistence living, like our cavemen ancestors.

We may be seeing the beginning of that now.

Demand is out-pacing the world's limited supplies, pushing prices higher. Full Article