The Wind Power Story - Wind Power for the World: The Rise of Modern Wind Energy - page 6

demand will exceed supply for the first time ever, and there will not
be enough oil to go around. When this happens, the consequences
will overshadow everything else on the political agenda. The
only real doubt among the experts is when the peak will occur, if it

hasn't already occurred.
It is the impact on economic growth that is likely to be the most
immediate efect of the coming oil shortage. It will come as a great
surprise because mainstream economics is fatally flawed when
it comes to understanding the dependence of growth on energy.
The economists' approach is to look at the national accounts
and observe that energy use accounts for about 5% of GDP; no
problem. But this is because their prices are all wrong. And they
are wrong because mainstream economics has no concept of
physical limits to growth, and the true value of natural capital like
oil reserves. They, and their political masters, are in for a sobering
surprise.
When physicist Robert Ayres of the European Business School,
INSEAD, applied a physics approach to economic growth models, he
was able to show that 75% of growth in US GDP in the 20th century
was due to increased energy use, and not just 5% as suggested by
the economists' accounting approach. His model was far better
than the economists' traditional labour/capital model, which
could only explain 25% of the actual growth. Ayres concluded:
“Economic growth depends on producing continuously greater
quantities of useful work” (i.e., more and more net energy) [3].
Once we enter the period of energy descent in the relatively
near future, oil and natural gas production is likely to fall by about
3% per annum, according to leading oil geologist Colin Campbell,
who warned of what was coming as early as 1990, and urged
politicians to plan at least ten years ahead of the peak to avoid
chaos. His appeal—like many others from the scientific community—
was ignored [4]. The decrease in GDP for a 3% descent, according
to the Ayres model, is 2.25% per year, suggesting we will enter a
semi-permanent depression globally, at least for several years, if
not decades.
Our whole society has been built up around the unrealistic
concept of unlimited cheap oil. For example, if we take into account
the oil used in chemical-based industrial agriculture for fertiliser
production, farm machinery, transportation, irrigation, livestock
raising (exclusive feed) and pesticide production in the United