By late 2008, it is clear that the world is slipping into an unprecedented economic crisis precipitated by terminal growth. The basic underlying cause is that an absolute prerequisite (along with inert raw materials) for growth of anything (a bird’s nest, a living body, a building, or a civilization) is a readily available source of surplus energy. Since 2004, the world-wide production and consumption of finite fossil fuels led by conventional oil, which peaked in 2005, began to level off and is facing a terminal decline.

   The modern economic concept of a debt-based financial system predicated on expected future growth cannot continue. The limits of  pre-stored energy have changed the rules. The following model of energy flow shows our basic human predicament. Energy is that elusive multi-faceted “something” required for any combination of work, heat, and growth. It can be stored for future use and is frequently confused with currency, wealth, and power, which is only a measure of how fast it is being used. Without energy in any of its many forms, nothing happens except system contraction and cooling.

   Engineers simplify this complex principal by analyzing and quantifying the energy balance over a period of time within a closed dynamic system. Since energy cannot be created or destroyed, the difference between all the energy inputs minus all the energy outputs must be accounted for as internal growth, storage, or contraction (decay) and can be summarized in an energy-flow model. In minus out equals growth or decay.

   The basic concept is no different than water flowing into and out of a leaky pail or electrical current flowing into and out of a storage battery. Another personal analogy is energy (from food) flowing into our bodies while energy in the form of work and heat to maintain our metabolism and temperature flows out. An excess of inflow over outflow appears as growth (even obesity). What could be simpler?

   Yet, misunderstanding the balance of energy is the basis for so many seemingly dissimilar problems like running out of gas, excess weight as fat storage, or the collapse of civilizations. Understandably, much confusion arises because energy can hide in many different forms and is always trying to dissipate to a lower-energy form. For instance, the pail can leak, the water can evaporate or we might starve for lack of food.

NEXT: Energy-flow Balance for a Closed System

Gasoline Rationing . . Are You Kidding?