Blind Spot

Like thousands of other people, I subscribe to John Mauldin’s weekly newsletter and commentaries.

You have to admire the man. He’s an entrepreneur in the classic mould whose analysis of the world’s economic gyrations is always worth reading.

Last week he was talking to Chris Martenson over at the Crash Course (audio here and transcript here).

He’s really great on the effects of the unfolding debt collapse on Europe, and never shy about describing the ‘hard choices’ we’re facing.

But when Martenson mentions peak oil, the Mauldin shutters come down with a (polite) thump.

John Mauldin: “Well, I’m not really a believer in peak oil. I’m a believer in peak, cheap oil, which is more to what you were saying. I mean, there’s plenty of energy out there, it’s just not cheap any more.

“One of the things that we in the US have to do is we have to figure out how to be energy independent because we can’t deleverage our country and reduce our deficits until we become energy independent

“And, we can become energy independent within four to five years if we basically look around to each other and say, we’re going to punch a lot of holes in the ground.

“We’re going to do what it takes to get that energy out and we’re also going to make ourselves more efficient. We can get there.”

Mind set

Let’s leave aside the point that not ‘believing’ that oil and other finite resources will peak some day is like not believing in gravity.

It’s strange (but, I think characteristic of today’s mind set) that someone as well-connected, erudite and intelligent as Mr Mauldin is prepared to believe that unicorns can be crossed with dragons to produce angels – sorry, that US could become energy independent by the end of the next presidential term.

There’s not a cat’s chance in hell of the US finding enough oil under its own soil and territorial waters to replace the 60% of its consumption that it currently needs to import.

At the same time, it’s having to use more high-quality oil energy to maintain the necessary inputs of energy from coal, which now comes from lower-quality or less accessible stocks.

And even if the US did have 100 more years of gas – which it doesn’t – Vaclav Smil has pointed out that transitioning from coal-fired electricity generation and oil-powered transport to gas would take 40 or 50 years, not four or five.


Mr Mauldin’s response to the world’s inescapable energy predicament is a fascinating case study of what happens when hard-wired certainties inculcated by three centuries of breakneck expansion run up against hard resource limits that have been easy to see coming for the last 40 years and plainly visible since the turn of the century.

Punching holes in the ground cannot be a solution because the problem is that the holes don’t work. We’re far up the net energy cul-de-sac already: vastly increased capital and resources diverted into hole-punching: relentlessly diminishing net energy returned.

I can’t believe that Mr Mauldin doesn’t understand the net energy issue. But in any case he side steps it with a petulant-sounding swipe at what he characterises as a minority of obstructionist Luddite environmentalists:

“You have to decide… a majority of the people have to override the lurch to the left and saying anything that has to do with carbon fuel is bad and we should let the civilization rot rather than use carbon based energy.”

Really? Is there any question that ‘the majority’ absolutely are burning, and will continue to burn, every last drop of fuel, lump of coal, puff of gas, leaf, twig and ball of fluff to try to keep civilisation going?

Arithmetic of net energy

Unfortunately the arithmetic of net energy makes it impossible for the endeavour to succeed – not that the maths of population growth, water scarcity, ocean acidification and all the other spin-offs of exponentially plundering finite resources add up to an especially strong case for continuing to grow civilisation anyway.

Of course, that is the whole point of the Crash Course, and at this point Martenson tactfully steers the conversation back on to common ground and the issue of the debt supercycle endgame.

If we had the means to provide ourselves with all the energy we need – now, today, from real resources and using proven, scalable technologies – we would still have many problems but, with people like John Mauldin around, no-one would bet against us solving them in a way that allowed us to maintain modern civilisation (which simply means living a highly energy-dependent lifestyle).

But we don’t have the energy. There’s less of it and it costs more. The US and Europe are using less fossil fuel and it feels bad – lost jobs, failing airlines, closing businesses, crumbling infrastructure. In other parts of the world, clean water is a luxury disappearing and electricity is ever more intermittent: they’d love to have our problems.


As John Michael Greer says, we’re facing a predicament. Mr Mauldin gamely sticks to his assertion that there are “no easy solutions” but the truth is that a predicament has no solutions whatsoever. The structure we’ve built cannot deal with the situation it’s created: the situation is dealing with us.

Change happens. It’s how you deal with it that counts. Fossil-fuelled industrial civilisation will give way to something that runs on a lot less energy. The trick will be to get from here to there as slowly and peacefully as possible, since it’s pretty certain that post-industrial earth won’t support seven billion humans.

But the industrialisers, for whom Mr Mauldin is in many ways a leading PR guy, are a long way from accepting that a change in direction is necessary even though the ‘enabler’ of industrial growth (the energy we got from wood, then coal, then oil and gas) longer even maintains the system, let alone grows it.

The straw everyone clutches at is the ‘f’ word – fusion. Mr Mauldin cannot help it: “I mean, until somebody can you know get cold fusion to work or whatever.”

Maybe… But do read Tom Murphy’s analysis at Do the Math before you get carried away.

In fact, I heartily recommend reading all of Mr Murphy’s arithmetical dissections of the various energy pathways open to us. He’s smart. He’s practical. He’s not remotely a doom and gloom merchant.

But, unlike many of today’s political and economic leaders, there are no pies in his skies.

I bet that if he read Mr Mauldin’s columns and books, he’d fully agree with their analysis of the debt supercycle, the inevitability of the debt collapse that’s now gathering pace, and the equal inevitability that another supercycle will arise to take its place.

Exponentially bigger

But for Mr Mauldin’s view of history and progress to be vindicated, the next supercycle would have to be exponentially bigger than the current one – the one that exploded the world’s population and put most of its critical systems under enormous strain.

Do all that again? With diminishing energy and ballooning challenges? Of course! That’s what turns entrepreneurs like Mr Mauldin on. It always has done (which is why ideas, technology and well-being were improving for centuries before the process became hypertrophic during and after the industrial revolution).

Surely there’s a less mad future than re-running the last 300 years of beggar-thy-neighbour growth at any price in the hope that next time it will all work out all right for everyone?

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