Peter Thiel claims that Trump’s election victory marks the collapse of liberalism, a public rejection of progressive academia, and the end of the technocratic deep state. Pippa Malmgren calls it “America’s glasnost moment,” framing it as “Tech Bros storming the ramparts” and “the ultimate audit.”
What nonsense. Thiel’s disillusionment with the system is nothing new, and Malmgren’s fantasy of running the government like a startup is naive at best. If the so-called tech bros turn governance into another Facebook or Twitter experiment, we’re not heading for a renaissance—we’re heading for disaster.
The hype around this election is overblown. It’s the third straight time Americans ousted the incumbent party—that’s it. Trump won because voters were angry about inflation. High prices united 9 in 10 voters in frustration.
What’s happening in America is not unique. Inflation, immigration, and populism are reshaping Europe, Pakistan, Sri Lanka, Zimbabwe, Argentina, and Venezuela. Americans see those issues as domestic crises, but they reflect a global trend. Inflation is a symptom of deep structural issues tied to energy and economic systems, specifically the decreasing affordability of oil and the growing societal debt burden.
The Ukraine war disrupted global oil markets, raising energy prices significantly. This, in turn, increased costs across nearly every sector, as oil affects transportation, manufacturing, and agriculture. Higher oil prices strain consumers and businesses, reducing disposable income and profitability. This leads to cost-push inflation, where rising production costs drive up prices of goods and services.
The fiscal burden of war, the massive debt surge during COVID, and the end of 30 years of globalization-driven deflation created a perfect storm for inflation. Whether you blame economic factors, energy costs, or both, it’s clear this was a structural issue, not the result of Biden’s policies. Inflation hit economies worldwide, not just the U.S.
None of this is meant to diminish the legitimacy of Trump’s victory. It was decisive and directly tied to voters’ frustration with worsening economic conditions under Biden. It’s fair that they voiced their dissatisfaction at the polls. The point is that inflation is a global structural problem that new policies won’t fix quickly or easily.
All of Trump’s—or any other leader’s policies—tax cuts, tariffs, government shake-ups, and immigration curbs—can’t change the fundamental reality: slower economic growth is tied to the plateau and eventual decline of oil consumption.
Worsening economic conditions for average Americans started in the 1970s, as the post-WWII boom faded. U.S. oil production peaked in 1970 and the country became the biggest importer of foreign oil in a remarkably short period (Figure 1). U.S. oil imports increased 5-fold by 1977 and 7.5-fold by 2006. Paying foreign companies for oil drains domestic wealth, increases trade deficits, and reduces capital available for investment in local industries, slowing economic growth.
Figure 1. U.S. oil imports increased 5-fold by 1977 and 7.5-fold by 2006 following the 1970 peak in domestic production. Source: EIA & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
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The oil shocks of the 1970s and early 1980s sent costs soaring, triggering stagflation with rising inflation and unemployment. Tight monetary policies choked growth, while intensifying competition from Germany and Japan only made things worse.
The U.S. economy faced back-to-back recessions in 1980 and 1981-82, only to rebound in the latter half of the 1980s. This recovery is often credited to Ronald Reagan’s policies—tax cuts, ballooning debt, increased government spending, and deregulation.
“Reaganomics” is widely celebrated as a golden age for the American economy, but the numbers tell a different story. GDP growth during Reagan’s presidency averaged just 1.9%—an improvement from the early 1980s recessions but well below the 2.6% pre-recession average (Figure 2).
What’s often forgotten is the role of sky-high oil prices in shaping that era. Oil shocks sent WTI prices soaring from an average of $50 in the 1970s to an average of $125 from 1979 through 1982 (2024 dollars). Inflation fueled by these prices was a significant part of the economic crisis Reagan inherited in 1981. The recovery had as much to do with falling oil prices as it did with any policy initiative.
Figure 2. GDP averaged only 1.9% during the Reagan presidency yet people remember it as an economic renaissance. It was certainly an improvement from the 1980 and 1981-82 recessions. Source: St Louis Fed, EIA, BLS & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
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Reagan tackled inflation by pushing interest rates to the highest levels in modern history. Treasury yields approached 15% (Figure 3), drawing investors to U.S. treasuries. This created the perfect setup for Reagan to borrow heavily against those revenues.
The result? A 19% increase in the U.S. debt-to-GDP ratio. Reagan’s policies didn’t fix the structural issues; they just shifted the burden to future taxpayers. What looked like economic strength was financed with borrowed money.
Figure 3. The increase in U.S. debt-to-GDP began with Reaganomics in the 1980s and surged after the 2008 Financial Collapse and the Covid pandemic. The long-term decline in treasury yields reversed in 2020. Source: St Louis Fed & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
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The debt spiral didn’t end with Reagan—it became the norm. Debt-to-GDP climbed 37% after the 2008 Financial Collapse and another 26% during the Covid pandemic. By the second quarter of 2024, U.S. debt had reached 120% of GDP, one of the largest drags on economic growth today.
Trump’s victory reflects voter dissatisfaction with a system hitting the limits of growth—a symptom of deeper economic realities.
Nate Hagens describes the “carbon pulse” as a brief, extraordinary chapter in human history, when fossil fuel extraction—especially oil—drove unprecedented economic expansion. This pulse fueled industrialization, modern infrastructure, and technological progress, lifting living standards worldwide.
That era is ending. The economic future isn’t about endless growth; it’s about managing decline. The incoming Trump administration hasn’t figured that out. Neither has the American public.
“Making America Great Again” is a fantasy—a refusal to acknowledge the history of the last 50 years. It pretends the challenges we face aren’t the result of structural limits but of bad policies and bloated government. It’s easier to sell nostalgia than to face the hard truths of a world where growth is no longer guaranteed.
Which brings us back to the tech bros—Musk and Ramaswamy—and their ridiculous fixation on the so-called deep state. The truth is far less exciting. Governments are run by career civil servants who keep the system functioning despite the revolving door of political appointees, most of whom know little about their new roles or how to manage a government department. The “deep state” isn’t some shadowy cabal; it’s the people keeping the lights on while their bosses figure out where the bathrooms are.
Whoever thinks that running a government like running a business clearly understands neither. Businesses prioritize profit and short-term gains for shareholders. Governments, by contrast, exist to serve the public good—providing essential services, ensuring equity, and tackling long-term challenges that have nothing to do with profit or efficiency. Trying to run a government like a business is a category error of the highest order.
As I’ve explained earlier in this post, the biggest problem facing government isn’t the inefficiency that the tech bros aim to eradicate or the deep state. It’s debt.
John Mauldin put it best: “cutting the budget is sadly not just rocket science.” The problem has festered too long, and everyone wants to keep their benefits while cutting someone else’s. Even Elon Musk will struggle with this one.
“If we are to start reducing the debt, the first step is to stop digging.
“Right now, the government runs a roughly $2 trillion annual deficit. To balance the budget, we would need $2 trillion in spending cuts and/or revenue increases, not just once but every single year.”
John Mauldin
For those who think the Justice Department is “weaponized” because it brought charges against Donald Trump, let’s set the record straight. Juries found him guilty of sexual assault and business fraud in cases brought by prosecutors entirely outside the Justice Department. The evidence, not politics, led to those verdicts. Facts matter, even if they’re inconvenient.
I’m no fan of Trump, and it’s not about his policies. He’s dishonest, immoral, and psychologically unstable—a man whose actions and history have earned my distrust and dislike. What’s worse, he and the Republican Party have abandoned conservative principles entirely. Tradition, stability, and the preservation of social norms have been tossed aside in favor of chaos and grievance-driven politics.
Their obsession with shaking up the Justice and Defense departments isn’t about improving bureaucracy; it’s a temper tantrum. The idea of gutting the FBI and CIA is so reckless it makes “defund the police” look like a minor inconvenience. This isn’t reform—it’s destruction masquerading as leadership.
And that brings me back to energy—the one issue that should be front and center for any leader serious about addressing the economic hardships facing everyday Americans.
I’m encouraged by Trump’s nomination of Chris Wright as Secretary of Energy. Wright brings a rare depth of energy awareness to government—something we haven’t seen in decades. He’s right to call out the energy transition as largely a myth, one that has failed to reduce carbon emissions despite trillions spent over decades. But that’s no reason to downplay the risks of climate change as less urgent than other global challenges.
The biggest risks of the next decade are financial overshoot, geopolitical instability, governance failures, and reliance on fragile supply chains (not to mention nuclear war). That doesn’t diminish the gravity of climate risks or give leaders a free pass to ignore them. Addressing these interconnected challenges requires balanced priorities—not denial or dismissal.
Modern economic growth rests on cheap, abundant fossil fuels. The shale revolution may have bought us time, but it hasn’t changed the reality of rising energy costs. While horizontal drilling and hydraulic fracturing are impressive technological feats, they come with a price.
Shale technology has driven a three-fold increase in oil and gas drilling costs over the last 20 years (Figure 4). Over the same period, real WTI prices have doubled—proof that this technology wasn’t free. Since 2021, drilling costs have risen another 7%. The marvels of shale don’t change the underlying math: energy is getting more expensive, and that’s not a trend we can innovate our way out of.
Figure 4. Shale technology has resulted in a three-fold increase in oil and gas drilling costs. Real WTI price increased two-fold over the same period Drilling cost has increased 7% since 2021. Source: Fed Reserve Bank & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
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Higher energy costs are a major driver of inflation and economic hardship, and there’s no easy fix. Figure 5 shows the stark reality: since 2003, oil prices have averaged $99 per barrel, compared to just $39 in the previous decade (in 2024 dollars). It’s no wonder economic growth has been sluggish. Expensive oil raises the cost of doing business and drives up prices for goods and services, squeezing both companies and consumers. This isn’t just an energy problem—it’s an economy-wide drag.
Figure 5. Since 2022 crude oil and condensate production has been flat It has averaged 3 mmb/d less than the 2018 peak of 84 mmb/d. Oil price for the last 20 years has averaged 2.5 times the level of the decade before 2003. Source: EIA, BLS & Labyrinth Consulting Services, Inc. Click on the image to enlarge.
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The other glaring issue in Figure 5 is that crude and condensate production has flatlined since 2022. It’s no longer on the steady, upward trajectory we saw in the three decades before Covid. Over the past few years, production has averaged 3 million barrels per day (mmb/d) below the 2018 peak of 84 mmb/d. All else being equal, this points to even higher oil prices ahead—unless something changes. And right now, nothing suggests it will.
The “drill-baby-drill” rhetoric from the president-elect is detached from reality. U.S. oil production is already at an all-time high and unlikely to increase much further. Oil companies don’t have the credit to fund another surge, nor are they willing to risk eroding investor trust—a hard lesson learned during the pre-2020 production frenzy.
The U.S. doesn’t have unlimited reserves, and chasing more supply will only squeeze already thin margins for oil producers and refineries. This isn’t a production problem—it’s a market problem, and more drilling won’t fix it.
Trump was elected to fix the economy. I doubt he—or anyone else—can pull that off, especially not by banking on tech bros to innovate us into economic growth. Shaking up the government may sound appealing, but I’ve been through major reorganizations at Fortune 100 companies. Every time, it led to months or years of distraction, shifting the focus from making money to rearranging the deck chairs.
Trump may think he has a mandate to fix the economy, but I doubt most Americans believe that includes taking a sledgehammer to the Justice or Defense departments to settle personal scores. That’s not leadership—it’s a vendetta.
Energy is the economy, plain and simple. If the president-elect wants to make life better for average Americans, he should focus on that. He’s got a solid pick in Chris Wright at the Energy Department. My advice? Ask him how to use energy to rebuild economic stability. That’s where the real answers are.
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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.
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