A Tipping Point for Global Population and Economic Growth: What it Means for Oil
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.
Source: United Nations and Labyrinth Consulting Services, Inc.
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 The implications are profound, but most are still clinging to outdated models that no longer apply.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.”
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.”
Source: Do The Math
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.
Per-capita consumption peaked in 2015.
Source: U.N., EIA & Labyrinth Consulting Services, Inc.
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.
Source: CFTC, ICE, CME & Labyrinth Consulting Services, Inc.
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.
Source: New Wine Collective and Labyrinth Consulting Services, Inc.
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.
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Thank you for this data update. The data is consistent with the theoretical results in this paper on oil price dynamics: https://link.springer.com/article/10.1007/s41247-020-00081-4
Cheers,
Ian
Thanks for your comment, Ian.
All the best,
Art
Art,
I had a “shower thought” that as the global economy and globalization winds down, the supply chains that enable oil and gas exploration, extraction, refining (and whatnot) could collapse from bottom-up.
I’ve gotten the impression that the oil & gas industry is very high-tech and complex business these days. I have no idea how resilient its supply chains are so I figured I’d ask what do you think about this little shower thought of mine.
Greetings,
Pas
Pas,
My friend Nate Hagens has explained this best. The greatest risks to the stability of our society in the next decade include:
Financial collapse, geopolitical upheavals, over-complexity & collapse of supply chains, failure of the social contract and governance, and ecological damage.
All the best,
Art
Art, your assertion that “Fewer people mean less economic and technological growth” is not a given. Output is a function of capital and labor. Even if labor is falling, technology has making capital more productive since the beginning of the Industrial Revolution. Why do you believe that technological growth will slow as population declines? A surge in robots will displace labor in many occupations and AI may well keep economic out growing indefinitely.
Les,
Technology and innovation is part of the progress narrative that is not well supported by data. I’m not saying it’s not a factor but it’s a lot less important than our cultural mythology suggests.
I recommend that you read this post for context:
https://www.artberman.com/blog/technology-and-innovation-are-overrated-implications-for-ai/
All the best,
Art
I cannot agree.
For one thing, population growth depends on family formation and sexual morals. Certain subgroups in the US, secular liberals, for example, are far below replacement rate. On the other hand, Amish women have on average 4 children. More religious, conservative subgroups will replace the dominant culture. America of the future might consist of Mormons, Southern Baptists, traditional Catholics and Amish/Mennonites. America will not necessarily keep shrinking.
Secondly, demand for oil will not go down. About one billion people have high living standards and their oil use has stabilized. There are another 4 billion who want to get there and currently use very little oil per capita. Even with falling birth rates, that will be a big demand factor.
Richard,
The U.S. is not the world, and you will be hard-pressed to support your family values belief with data.
Similarly, your assertion that demand for oil can’t go down is not supported by data or by any international agency or oil company’s energy outlook reports.
I suggest that you start looking at data instead of relying on personal opinions.
All the best,
Art
To me it is important to distinguish between growth and per capita growth. As the world population grows past 8 billion I see little value in an increased number and lots of downside. Per capita growth is productivity and can continue even as the population shrinks. I believe the population is shrinking because as the world becomes more educated and more crowded, the populous realizes that it does not want and can’t afford a larger population. Here in Vancouver Canada the standard of living and quality of life have steadily declined over the last 20 – 30 years as our federal government has pursued an ill conceived and poorly planned expansion of the population through excess immigration. This manifests itself in unaffordable housing, less housing space per person, declining healthcare, more traffic, failing infrastructure, and increased personal and public debt per capita. The electorate is finally starting to connect the dots.
I recognize that managing an economy with declining and aging population will be a challenge, but with ever increasing technological solutions and more natural resource per capita, we find ourselves with a powerful arsenal. All we need is good generals to lead the charge, not the current bunch of uneducated, ionexperienced, myopic politicians.
Ric,
No one knows exactly who ferility rates are falling globally. Your arguments may apply to a rich society but birth rates are also falling in some of the poorest, least educated parts of the world.
I recommend reading this new article from Foreign Affairs–The Age of Depopulation:
https://www.foreignaffairs.com/world/age-depopulation-surviving-world-gone-gray-nicholas-eberstadt?utm_medium=promo_email&utm_source=fa_edit&utm_campaign=pre_release_eberstadt_apboth&utm_content=20241010&utm_term=ESPZZ004O4
All the best,
Art
Art,
An excellent data-based summary. It actually maps well the systems modelling published in Meadows et al “Limits to growth” back in 1972 that points to a declining human enterprise through this century. Its true that that birth rates are declining, but I hope people don’t interpret that as a call for increased fertility. We are still adding about 60-80 million people per year to the planet. Although birth rates were higher in the 1960’s and 1970’s, there was only about 3 billion people on Earth back then. Now there is 8 billion, so the low birth rates still produce a high absolute population gain. Regardless, our ecological footprint is greater than one planet (and about 4-5 planets for rich people), so a controlled population decline would help the Nature’s future.
Keep up those fact based summaries,
Phil
Phil,
Thanks for your comments. Elon Musk is one of those calling for reversing the trend of falling birth rates. He says it’s a catastrophe.
All the best,
Art
In my millennial age bracket alot are not having kids ,mainly being it seems alot of them can’t afford them or due to climate worrys ,there’s exceptions off course ,but from personal observations and what my sister says about her friend’s it seems to be very common,
As a kid in the 90s I remember seeing how many miserable people sat in nightmare jobs and commutes in Los Angeles mainly to keep their kids in decent schools and keep the house required to do that,Nursery schools open at 5 am there,I remember thinking there is no way I will ever sign up for that .
AA,
As I responded to Ric, no one knows exactly who ferility rates are falling globally.
I recommend reading this new article from Foreign Affairs–The Age of Depopulation:
https://www.foreignaffairs.com/world/age-depopulation-surviving-world-gone-gray-nicholas-eberstadt?utm_medium=promo_email&utm_source=fa_edit&utm_campaign=pre_release_eberstadt_apboth&utm_content=20241010&utm_term=ESPZZ004O4
All the best,
Art
Art, your recent posts it must be said are extremely supportive, critical in my opinion, for understanding & future progress. Thank you! Allow me to be both as clear and succinct as possible; we will not and cannot stop growing, it’s the basis of life, along with the energy necessary, each inseparable from the other… (as I think, you, others here have pontificated). Further, we will not and cannot, continue with the current paradigm as you so well recently and continuing elucidate (IMO the unit to scale, carbon based, centralized is the matter, one of the primarily matters…100+ years old paradigm and now ‘anchoring back’ to the worst ethics of its early days). We’re chasing our tail! No doubt however you are precisely correct in asserting “most are still clinging to outdated models that no longer apply”. The greater and longer that ‘clinging’ the greater and more irreversibly the unfolding disaster. Not to mention ‘pain’ in making the inevitable ‘transition’. As a geo-physical scientist, perhaps the ‘chops’ to write about the latency in the physical processes & dynamic of the conversion of the constituent emissions that become GHG, heating….weather and climate disaster events?? My best wishes and thank you again.
The rules of the game that worked on the upslope of the carbon pulse will not necessarily be what works on the downslope.
Your last couple of posts that highlight the topping of economic growth and potentially demographic impacts (as the portion of the human population that is still growing is relatively benign in its resource consumption), are mind blowing in their implications.
The systems that underpin our civilization are reliant upon growth. I don’t expect them to remain coherent with stagnation, let alone contraction.
We need to start exploring how humanity can adopt more appropriate strategies on the downslope. How can we protect and celebrate innovations that are worth preserving and let go of what is just mindless noise and activity?
Kevin,
Thanks for your thoughts. As I’ve stated many times, the most critical issue is to change our relationship to energy.
All the best,
Art
The World Wildlife Fund has a report out which documents a decline in the population of vertebrate species globally of over 70% over the last 50 years. Over the same period, the human population of the planet doubled from approximately four to eight billion people.
This increase of humans has put massive stress on natural ecosystems.
A decline in the human population will present challenges (for example, how to take care of all the elderly), but is inevitable. We might as well get on with the process of adapting to this new reality.
Ed,
I’ve shown a graph of the WWF data in many posts over the last year or so.
The decline in animal populations is quite different from the impending fall in human populations as the former is because of environmental causes whereas the latter is more because of agency.
All the best,
Art
Capitalism in the manner it is currently practiced requires 2% annual growth rates. If the costs of producing an increase in oil and gas rate production become prohibitive to the economy then the economy is not sustainable. It can be propped up for a while with credit and debt but that eventually runs its course as well. It is easy to understand and the governments of the world have known about this for decades.
John,
Thanks for your comments.
All the best,
Art
Bonjour Art, au début je n avait pas bien saisi tout votre message et après j ai pensé au Japon.
Avec une consommation maximal en 1996 à 5.6mb/j et aujourd’hui 3.3mb/j.
Le Japon est un laboratoire qui peut nous donner des indices sur le futur.