The Greatest Threat to the Global Economy. The world approaches a lebensraum moment.

By Robert Morley

Something potentially ominous occurred last year. Supply and demand for the world’s most strategic commodity collided head on.

The world consumed more oil than it produced. Full stop.

The world has experienced oil shocks before, but this looming one is different. During the 1970s, the Arabs temporarily turned off the taps to increase the price and blackmail the West. As a result, the global economy took a nosedive. But today, the situation could be orders of magnitude more dangerous because supply limitations are not purely geopolitical in nature—or temporary—but structural.

In June, BP released its “Statistical Review of World Energy.” This report is considered the Holy Grail by many energy investors, since it is one of the most comprehensive energy reports produced.

In short, the report said last year the world again burned more oil than it pumped out of the ground. And that the divergence is widening. The world is now consuming 5 million barrels of oil per day more than it produces. This is clearly unsustainable. Part of the gap was covered by biofuels, like corn ethanol, but that was only able to make up for a small fraction of the shortfall.

To keep the cars running, furnaces burning, trains pulling, supertankers sailing, jets flying, plastics manufacturing, lubricants lubing—and food growing—the world dipped heavily into its above-ground emergency reserves.

But how much longer can the world operate in deficit before someone panics?

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