The global economy is predicated on growth, but that era is ending.
Global fertility rates have tanked since the 1960s, dropping from around 5 kids per woman to just 2.3 today. It hasn’t been uniform—some regions slowed down faster than others—but the story is the same almost everywhere except Africa and Oceania (Figure 1). Outside of those regions, birth rates are now below replacement levels, meaning populations will shrink.
Figure 1. Falling global fertility rates signal the end of economic growth. Asia, South America, North America and Europe are already below replacement rates. Source: United Nations and Labyrinth Consulting Services, Inc.
Click on the image to enlarge.
|
While we can’t predict the exact outcomes, one thing is certain: the future will have fewer people. Fewer people mean less economic and technological growth. The implications are profound, but most are still clinging to outdated models that no longer apply. Reality is about to change, and it won’t be business as usual.
“The major development underpinning the prospect for an early-century peak in human population and even earlier peak in civilizational power is a rapid and seemingly unexpected decline in fertility rates across the world.”
Tom Murphy
In a recent podcast with DJ White and Nate Hagens, Murphy didn’t mince words—he sees the peak of civilizational power hitting as soon as 2033. This isn’t some distant, abstract idea. It’s right around the corner, and the clock is ticking.
He calls out the United Nations’ fertility rate projections in Figure 1 as unrealistic, plain and simple. To drive the point home, he uses an animated GIF (my Figure 2). It shows how each successive year of modeling seems to force a future that is unlike the data-driven past.
“What the animated GIF…helps us see is how stubborn the imagined far future is—consistently aiming for a one-size-fits-all convergence…but look at the persistent kinks in many of the curves at the moment the models take over.
“It’s as if someone believes we’ll finally figure it all out and settle down for a long reign of stability. What it really means is that extrapolation-based projections more than several decades out become highly suspect.”
Tom Murphy
Figure 2. U.N. TFR projections from 2010, 2012, 2015, 2017, 2019, and 2022. Source: Do The Math. Click on the image to enlarge.
|
Paradigms are the real issue here. A paradigm is a framework for how we view and make sense of the world. It’s a model that allows us to believe we’ve turned uncertainty into predictability, making the world seem manageable.
Our current societal paradigm is what Daniel Schmachtenberger calls the progress narrative. This narrative believes that technology, science, and economic growth will always pave the way to a better future, solving any problems that come with that growth. It’s a nice, tidy story, but falling fertility rates suggest that reality isn’t so cooperative. They’re a sign that the future may not follow the script, and that some challenges won’t just be engineered away.
Like fertility rates, oil consumption is starting to show signs of decline. The engine behind growth and the progress narrative has always been the energy surplus provided by fossil fuels, starting about 200 years ago. Economic growth and energy consumption—especially oil—are inseparable. The link is iron-clad. When you start questioning future energy consumption, you’re not just raising a red flag; you’re threatening the entire foundation of the progress story. If the energy story falters, so does the story of endless growth.
Gasoline and diesel account for more than half of world oil consumption but Figure 3 illustrates that 2024 consumption is projected to be flat with 2023. The Energy Information Administration (EIA) expects a slight decline at least through 2035, with gasoline use falling more than a million barrels per day.
igure 3. World gasoline and diesel consumption in 2024 is projected to be flat compared to 2023, with a slight annual decline anticipated through at least 2035. Per-capita consumption peaked in 2015. Source: U.N., EIA & Labyrinth Consulting Services, Inc.Click on the image to enlarge.
|
Oil fund managers know the score. They’ve been shorting the oil market since 2018 (Figure 4). Net long positions in Brent and WTI are at historic lows, a clear sign that the market sees no urgency about supply. The reality is, demand has been weakening for most of the last decade. The only thing keeping prices up has been a series of geopolitical crises, creating the illusion of a tight supply. But without those shocks, the market’s true weakness is exposed.
Most oil analysts, though, are still in denial. They keep insisting that supply is dangerously tight, that the market’s got it all wrong, and that we’re just one step away from a return to the boom times of the early 2000s. They haven’t caught on yet: those days are gone, and they’re not coming back.
Figure 4. Fund managers have been shorting oil since 2018. Brent + WTI net long positions are at historically low levels. This reflects market belief that there is little supply urgency for oil in the world. Source: CFTC, ICE, CME & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
|
Paradigms don’t die without a fight. The progress narrative held up as long as energy was cheap and abundant, back when the environmental and ecological costs weren’t on the radar. At first, problems like pollution and resource depletion seemed like outliers—easy to ignore. Even as they grew, the comforting belief that technology and human ingenuity would find a solution kept the story alive.
But now, climate change, ecological overshoot, falling fertility rates, and declining oil consumption are starting to converge. It’s getting harder to brush them aside as mere exceptions. The dominant paradigm is slipping from what Thomas Kuhn called “normal science” into “model drift.” And make no mistake—“model crisis” is just around the corner.
Figure 5. The Kuhn Cycle. Source: New Wine Collective and Labyrinth Consulting Services, Inc. Click on the image to enlarge.
|
Paradigms are valuable, no doubt—powerful tools that help us make sense of the world. But when they start showing cracks, they become a crutch, a way to avoid facing uncomfortable truths. They let us ignore contradictions and cling to the story that’s served us well. The problem comes when reality shifts, and the old paradigm can’t keep up. That’s when people who don’t want to adapt to the change become ugly and society can become divided and polarized.
Analysts and economists are stuck forcing today’s realities into obsolete models, missing what’s right in front of them. Oil isn’t just another commodity; it is the economy. And right now, oil markets are sending a message that couldn’t be clearer: the era of growth is over. Declining fertility rates only add more proof to this reality.
|
ABOUT THE AUTHOR
Art Berman is Director of Labyrinth Consulting Services, Sugar Land, Texas, and a world-renowned energy consultant with expertise based on over 40 years of experience working as a petroleum geologist. Visit his website, Shattering Energy Myths: One Fact at a Time, and learn more about Art here.
|
