"Today’s energy bottleneck may bring down major governments"

Our boilerplate introduction:

Gail is an actuary, she has to deal with the cold, hard reality of numbers and she's been 

applying that gimlet eye to the nexus of energy and finance for a long time....

From Gail Tverberg's Our Finite World blog, a mini tour-de-force, October 25:

Recently, I explained the key role played by diesel and jet fuel. In this post, I try to explain the energy bottleneck the world is facing because of an inadequate supply of these types of fuels, and the effects such a bottleneck may have. The world’s self-organizing economy tends to squeeze out what may be considered non-essential parts when bottlenecks are hit. Strangely, it appears to me that some central governments may be squeezed out. Countries that are rich enough to have big pension programs for their citizens seem to be especially vulnerable to having their governments collapse.

Figure 1. World supply of diesel and jet fuel per person, based on Middle Distillate data of the 2023 Statistical Review of World Energy, produced by the Energy Institute. Notes added by Gail Tverberg.

This squeezing out of non-essential parts of the economy can happen by war, but it can also happen because of financial problems brought about by “not sufficient actual goods and services to go around.” An underlying problem is that governments can print money, but they cannot print the actual resources needed to produce finished goods and services. I think that in the current situation, a squeezing out for financial reasons, or because legislators can’t agree, is at least as likely as another world war.

For example, the US is having trouble electing a Speaker of the House of Representatives because legislators disagree about funding plans. I can imagine a long shutdown occurring because of this impasse. Perhaps not this time around, but sometime in the next few years, such a disagreement may lead to a permanent shutdown of the US central government, leaving the individual states on their own. Programs of the US central government, such as Social Security and Medicare, would likely disappear. It would be up to the individual states to sponsor whatever replacement programs they are able to afford.

[1] An overview of the problem
In my view, we are in the midst of a great “squeezing out.” The economy, and in fact the entire universe, is a physics-based system that constantly evolves. Every part of the economy requires energy of the right types. Humans and animals eat food. Today’s economy requires many forms of fossil fuels, plus human labor. This evolution is in the direction of ever-greater complexity and ever-greater efficiency.

Right now, there is a bottleneck in energy supply caused by too much population relative to the amount of oil of the type used to make diesel and jet fuel (Figure 1). My concern is that many governments and businesses will collapse in response to what I call the Second Squeezing Out. In 1991, the central government of the Soviet Union collapsed, following a long downward slide starting about 1982.

All parts of economies, including government organizations and businesses, constantly evolve. They grow for a while, but when limits are hit, they are likely to shrink and may collapse. The current energy bottleneck is sufficiently dire that some observers worry about another world war taking place. Such a war could change national boundaries and reduce import capabilities of parts of the world. This would be a type of squeezing out of major parts of the world economy. In fact, shortages of coal seem to have set the stage for both World War I and World War II.

Each squeezing out is different. When there are physically not enough goods and services to go around, some inefficient parts of the economy must be squeezed out. Payments to pensioners seem to me to be particularly inefficient because pensioners are not themselves creating finished goods and services....

....MUCH MORE