This is a summary of a series of blog posts by another writer. He is trying to sell you ‘precious metals’ as a hedge against economic collapse, but his analysis of a coming crisis in US shale oil production seems highly plausible…
He suggests that activity in the world’s economy has been driven by cheap energy availability, and this has largely been provided by cheap US shale oil.
Nowadays, it appears that Peak Mainstream oil is already here. Each year the world needs to replace 3 million barrels per day of supply no longer provided from mature and declining oil fields at the same time as meeting growth in demand for oil. Any growth in contemporary world oil consumption was allowed by the US shale.
However, the decline in US shale oil production is even more dramatic than that for mature mainstream oil wells. The top 4 U.S. shale oil fields have suffered a 44% decline in their rate of production in less than a year, between Dec 2018 to Oct 2019.
It will take a massive amount of investment spending and thousands of new wells to offset these losses in production from shale oil, and keep the output stable. As the easily available shale oil has by now been taken (as businesses generally go for the easy targets first), it is probable that new shale oil will also require a lot more energy to retrieve. The ratio of Energy Return to Energy Input (EREI) will be much lower, so overall energy availability will be lower.
The spending and oil output is almost certainly ungeneratable, and unsustainable, in any kind of financial system. This situation is made worse as the author has argued elsewhere, because shale oil has largely survived on borrowed money, with investors hoping for long term stable production which has not eventuated. There will likely be large scale losses of this borrowed money, which could start a general financial collapse.
Lack of production also means that oil based energy collapse is extremely likely, and this will probably reinforce the financial collapse.
It is also likely to make the necessary transition into renewables harder, although it might ‘help’ through unplanned and catastrophic degrowth.
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