Dominance of Western Civilization Linked to Energy Consumption

One thought has been lurking around: that this whole era marks the end of an era.

At a minimum, we suspect we’re coming to the end of the credit bubble ...and an end to the asset speculation bubble it wrought. We’re probably coming to the end of the Dollar Era of the world monetary system. The American empire, too, seems to be peaking out; it is squandering its resources at such a rapid pace, it is hard to see where it will get the money to expand.

“We are all freakin’ doomed.” Our friend the Mogambo puts a fine point on it . But grosso modo, it seems that we are doomed in many ways...or one big way, depending on how you look at it.

One of the themes of these Daily Reckonings for the last eight years has been what might be called the ‘topping out’ of Western Civilization. Power and money is on the move, from West to East.

“You wouldn’t believe it,” says a friend just returned from a visit to Shanghai. “The buildings...the people...it’s like a city from the future...and so incredibly big. It took my breath away.”

We feel it too...whenever we travel to the East. So many people...so much energy.

The West triumphed over the rest of the world only recently – in the 18th, 19th and 20th centuries. Before that, a person in India or China had about the same standard of living – or maybe higher – than a person in France or in Britain. But then, the West took off. What, exactly, was the source of the West’s success? No one knows. But one innovation was perhaps paramount – the West converted matter to energy...and back to matter again...at a much faster rate than ever before. In the East, only Japan was able to come even close – and not before US warships showed the island nation how far behind the curve it had fallen. Then, after a breathtaking period of imitation and growth, in the early 20th century, Japan’s military machine was able to challenge the Russians, successfully, and the Americans, unsuccessfully.

Japan’s failure in WWII was largely a matter of energy. The United States had it in abundance. Japan barely had any at all. At the crucial battle of Leyte Gulf, Japan’s ships were practically immobilised by a lack of fuel.

Yes, dear reader, our civilization...and our hegemonic power...depends on energy. A colleague sent us a chart. It shows the connection between energy and GDP. The more energy you use, the higher the standard of living. Naturally, at the very top of the living standards is the United States of America...which is also at the very top of the world in energy consumption. That it is also on top of the world in terms of military power is, perhaps, no coincidence.

We showed this chart to our intrepid correspondent, Byron King.

“Hmmm,” he said. “Looks like if there’s no energy, there’s no GDP. Correlation is not always causality. But sometimes...wow.”

Of course, it makes sense. It takes energy to make things...to move them around...to farm...to manufacture...to cook ...to travel. And to carry a big stick. We remember from our brief encounter with physics that the total of energy is constant...and that energy and matter are interchangeable. Oil is black goo. It exists as matter, which we transform into energy...and use the energy to transform other things into other kinds of matter – trucks and cars, for example. Then, we put more energy into our fuel tanks to move matter around.

We have no quarrel with this program. And it salves our conscience to know that we will leave the earth no worse off – in a purely energy sense. Somehow, there has to be as much energy when we shuffle off as when we came kicking and screaming in.

The problem is not at the macro-philosophical level. The problem is a practical one. People want more stuff. It takes energy – notably in the form of that black goo we mentioned above – to make stuff. So, they’re going to want more energy to make. That is, they’re going to require more energy to raise their standards of living.

Trouble is, the supply of oil is somewhat limited. It’s not as easy to produce new oil as it is to produce new dollars. So, you can expect the price to rise. Even in real terms, the price is likely to go up, simply because more and more people want it...and the easy goo, close to the surface, in hospitable regions, has already been burnt up.

Back to the chart. While the United States, Britain, France and other rich, developed countries are at the top – both in terms of GDP/capita and energy consumption/capita – down at the bottom are countries without much stuff – but with a lot of people. China, for example. It will take a lot of energy to push China from the bottom of the chart to the top of it. But that’s exactly where China aims to go. And from what we hear, she probably will get there...which means, the Chinese have to use a lot of energy that might otherwise be used by people in the rich nations. Barring some technological breakthrough, you’d expect that people in the rich nations are going to pay a lot more for each barrel of oil they use. But current standards of living depend on oil at US$20 a barrel...maybe US$40 a barrel...maybe even US$80. At US$200 a barrel, the stuff of civilization is much more expensive...and the cost of being on top of the world is higher. The cost of being rich is going up, in other words. Ceteris paribus, that means that the rich nations aren’t going to be as rich as they used to be. It also means that the cost of operating a military machine is increasing. The American military is the biggest consumer of oil in the world.

And one other thing. There are those who think that burning fossil fuel is already much more costly than we realise. The theory is this: along with all that potential energy, locked up in the black goo, was an ocean of carbon dioxide. When you convert that matter to energy, you can’t help but release the carbon dioxide, which then floats into the atmosphere. Al Gore says that humans have never lived in a world with so much carbon dioxide in the atmosphere. The last time there was so much was millions of years ago, when it was a very different world from the one we evolved in. According to Gore, we have inadvertently recreated the conditions of the dinosaur age. And as a consequence we are going to have to live through a period of severe climate change – to which we will have to adapt, at great expense – if we can adapt at all.

Whether this is true or not, we couldn’t say. It seems believable. But so many prestigious scientists, leading statesmen and university professors believe it...the idea must be bogus in some way.

Bill Bonner
The Daily Reckoning Australia

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