How our energy problem leads to a debt collapse problem

This is a brief summary of a post by Gail Tverberg at Our Finite World. Gail demonstrates a link between the growth in world energy usage and growth in GDP, as shown in the chart below. In essence she says that this connection is a result of the link between energy consumption and human productivity.

The more energy consumed the more productive people are. However, over time this comes at a price – higher oil production costs. Higher costs leads to a rising oil price that in turn leads to a reduction in consumption. And thus lower productivity. Increasing debt can mask this for a while, but not for ever.

Gail concludes that the current situation of low oil prices and low productivity could be a precursor to deflationary collapse.  Read the whole article here.