Energy Costs Rising as National Debts Grow

Although gas prices are temporarily low at the pump, long-term energy costs are on the rise. According to Nathan John Hagens, contributing author to State of the World 2015, nations are papering over those costs with debt. Higher energy costs are leading to continued recessions, excess claims on future natural resources, and more-severe social inequality and poverty.

The relatively low cost of energy extraction compared to the benefits obtained from fossil fuels has been perhaps the most important factor in the industrialized world’s economic success. Historically, large quantities of inexpensive fuels were available even after accounting for the energy lost to extract and process them. But, as remaining fuels become less accessible, higher energy costs will have ripple effects through economies built around continued large energy-input requirements. Rising energy costs will endanger highly energy-intensive industries and practices—including the energy sector itself—as well as widen and deepen poverty as everything becomes more expensive.

“Despite having ‘plenty of energy,’ higher physical costs [of extraction] suggest that energy likely will rise from a historical average of 5 percent of GDP [gross domestic product], to 10–15 percent of GDP or higher,” writes Hagens.

In the short term, nations are taking on growing debt to avoid losses in GDP—an indicator of the economic health of a country. Since 2008, the Group of Seven nations (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) have added about $1 trillion per year in nominal GDP, but only by increasing their debt by over $18 trillion.

via Energy Costs Rising as National Debts GrowWorldwatch Institute Blog.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s