Probably The Most Important Chart In The World

Tyler Durden's picture

Having discussed the links between economic growth and energy resource constraints, and with the current geo-political fireworks as much about energy (costs, supply, and demand) as they are human rights, it would appear the following chart may well become the most-important indicator of future tensions...


Source: Goldman Sachs

This is not the first time we have discussed "self-sufficiency" - As none other than Bridgewater's Ray Dalio noted in a slightly different context:

"self-sufficiency encourages productivity by tying the ability to spend to the need to produce,"


"Societies in which individuals are more responsible for themselves grow more than those in which they are less responsible for themselves." The nine-factor gauge of self-sufficiency provides some interesting insights into those nations most likely to experience above-average growth going-forward and those that are not; as European countries, notably Italy, France, Spain, and Belgium, all ranking at the very bottom on self-sufficiency.

And here we discussed, What If Nations Were Less Dependent On One Another?

The ability to survive without trade or aid from other nations, for example, is not the same as the ability to reap enormous profits or grow one’s economy without trade with other nations. In other words, 'self-sufficiency' in terms of survival does not necessarily imply prosperity, but it does imply freedom of action without dependency on foreign approval, capital, resources, and expertise.


Freedom of action provided by independence/autarky also implies a pivotal reduction in vulnerability to foreign control of the cost and/or availability of essentials such as food and energy, and the resulting power of providers to blackmail or influence national priorities and policies.




Consider petroleum/fossil fuels as an example. Nations blessed with large reserves of fossil fuels are self-sufficient in terms of their own consumption, but the value of their resources on the international market generally leads to dependence on exports of oil/gas to fund the government, political elites, and general welfare. This dependence on the revenues derived from exporting oil/gas leads to what is known as the resource curse: The rest of the oil-exporting nation’s economy withers as capital and political favoritism concentrate on the revenues of exporting oil, and this distortion of the political order leads to cronyism, corruption, and misallocation of national wealth on a scale so vast that nations suffering from an abundance of marketable resources often decline into poverty and instability.


The other path to autarky is selecting and funding policies designed to directly increase self-sufficiency. One example might be Germany’s pursuit of alternative energy via state policies such as subsidies.


That policy-driven autarky requires trade-offs is apparent in Germany’s relative success in growing alternative energy production; the subsidies that have incentivized alternative energy production are now seen as costing more than the presumed gain in self-sufficiency, as fossil-fueled power generation is still needed as backup for fluctuating alt-energy production.


Though dependence on foreign energy has been lowered, Germany remains entirely dependent on its foreign energy suppliers, and as costs of that energy rise, Germany’s position as a competitive industrial powerhouse is being threatened: Industrial production is moving out of Germany to locales with lower energy costs, including the U.S.


The increase in domestic energy production was intended to reduce the vulnerability implicit in dependence on foreign energy providers, yet the increase in domestic energy production has not yet reached the critical threshold where vulnerability to price shocks has been significantly reduced.




America’s ability to project power and maintain its freedom of action both presume a network of diplomatic, military, and economic alliances and trading relationships which have (not coincidentally) fueled American corporation’s unprecedented profits.


The recent past has created an assumption that the U.S. can only prosper if it imports oil, goods, and services on a vast scale.

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VD's picture

if you squint your eyes and look very carefully you will see in the blue bars the letters: P U T I  N

TruthInSunshine's picture

I'm glad that ZH posts a wide variety of Guest Articles (with or without TD's color commentary), but I can't help but find it ironic whenever the likes of Goldman or Bridgewater are held out as credible sources on anything; or even being worthy of having their "opinions"'read (Goldman reams its own clients, trading against their positions that they helped establish, FFS).

VD's picture

reality is anythig u can get away with....

Keyser's picture

Canada should be concerned if the SHTF. Their obstinate neighbors to the south have been known to take what they want and call it yankee doodle dandy. 


Jack Burton's picture

Indeed. Should you choose not to hand over energy at the right price, you may be a threat to national security, a terror threat or be killing your own people and in need of RTP. Liberal or Conservative America will only tolerate so much independent tought up north there.

prains's picture

LOL....that's why Harper has been priming the pump here with ridiculous "War of 1812" propoganda ads. Fortifying the locals.....he's paying for renactments etc. if it wasn't so funny I'd be crying

SafelyGraze's picture

some helpful tips for shtf days


1. steak-fried grapefruit rind

2. dryer parts

3. water-pump bike

knukles's picture

So will Norway's takeover bid for Australia pass anti trust inspection?

FrankDrakman's picture

Um, the War of 1812 ads and re-enactments were over 2 years ago. Are you suggesting that we should expunge the entire period from our memories? Considering that we wouldn't exist as an independent nation if we'd lost, I think it's an important part of our history.

Or are you one of those whining left-wing Canadians who act as if the Canadian army has always been 'peace-keepers', and that the history of our armed forces has been one of rescuing cats and putting on displays at air shows? Feh.

prains's picture

You have no clue who or what i am or stand for, so your child-like inferences are exactly that, infantile. The war of 1812 happened exactly when?? 18 fucking 12, ass cheeks. What does that mean? It's ancient history and has absolutely no bearing, meaning or consequence in 2014 and anything else moving forward. It's stoopid gov't propoganda and you are obviously a paid for gov schill here to troll for your paymasters.............f.o.o.l

FrankDrakman's picture

"History has no.. meaning or consequence'.

And you calll me a fool?

You are correct - I have no idea what you stand for. You whine about a few $ spent on a few ads two years ago, so I assume - in the absence of anything to the contrary in any of your posts - you're a typical left-wing asswipe that would gladly have Justin Trudeau running the country and siphoning millions of $ to pay off his buddies in Quebec, as his daddy did, as Mulroney did, and as Chretien did. We have had a Liberal immigration policy for the last 50 years, which has swamped us with people who use Canada for passports of convenience, while their hearts and wallets are still in other countries, and who DON'T KNOW SHIT about Canadian history. We are not America; we are the people who chose not to be America, and I for one am pretty damn glad we did. That we might divert a few tax $ from supporting all these BS refugees into telling them and other would-be Canadians how we got here is not "stoopid propaganda"; it's a part of our history, and part of what makes our country what it is. That is, unless you're another left-wing asswipe who only thinks the value of his country is the size of the cheque he gets every month.

I like American people, but their recent governments have proven that Ike - the last great president they had - was right when he talked about the MIC. We sure as hell don't have one in Canada - look at our navy and the dithering about the F-35 - but that doesn't mean we should ignore the efforts of the people who got us here. I can't stand "stoopid" little pricks who are more than willing to suck off the teat today but don't give a damn about the history or sacrifice that lets them do so.

prains's picture

hey butt cheeks at least quote me correctly or don't quote me at all fuck wad, you're a fucking troll get over it


yes, you are the fool

CrashisOptimistic's picture

FYI oil sands oil is priced way under WTI or Brent. 

There are always convenient excuses like "transport" or viscosity.

OTOH they have only 1 customer for it. 

BobPaulson's picture

Another advantage to selling it at low price is the Canadian subsidiary loses money, and so pays no royalties on the heavy.Also, by refining south of the border, you can also export "diluant" (refined products) with no duties. It is an awesome scam that only a country full of us patsies would fall for and regularly vote back in the crooks running the scam.

CrashisOptimistic's picture

Good call, Bob.  A lot of condensate heads north to dilute the viscous stuff heading south so the US refineries can deal with it.

The EIA celebrates this as "petroleum product export".  It would be mind boggling if one didn't already know how much lying there is about oil.

BobPaulson's picture

The shit has hit the fan and Canada's neighbour is taking what it wants. The sad part is that we give it away in exchange for green pieces of paper they are printing and giving themselves.

Terminus C's picture

Canada trades oil for Veggies, soon it'll be water for veggies (no water, no veggies)

ParkAveFlasher's picture

Don't worry Canada, in the end the US will show its ultimate loyalty is to the British crown, as usual.

Jim in MN's picture

Pssst....the Western Hemisphere could cut ties with Eurasia and be energy independent. 

Just sink any tanker that tries to scoot over to the Bad Supercontinent.  Leave it to China and the Saudis to set the Eurasian price (they will regardless of what the Americas do--we just don't have to take it).

But never mind me.  Forget you know this information. 

Keep on with the Empire, pip pip.

frank650's picture

Self suffiency reductio ad absurdum is one person providing for all needs (housing, medical, education, etc.).   

Trade is beneficial and economically efficient.


CrashisOptimistic's picture

You do realize this planet doesn't trade with any others?

BobPaulson's picture

BINGO! But if we did find ET's, the pigmen would tell us our economy would tank if we don't immediately send them all our jobs.

AlamoJack's picture

Trade will NEVER be economically efficient as long as governments are involved.  The question is, just who is benefitting?

Grande Tetons's picture

FYI, where I live...prices went up about 20 percent on non persihable items at Costco over the last month. For example. diapers that once would cost 40usd now cost 50usd. 

I am not worried...because...everything...else...appears to be firmly anchored. 

Fuck...I am I glad...I bought....fucking gold....fuck fuck fuck...fuckdeededdfuckfuckfuckfuck. 

prains's picture

diapers and gold.....which end of the age spectrum do you reside?

Grande Tetons's picture

My kid is about 2. However, I find that I shit myslelf on a more frequent basis.  Kinda funny, he know refers to his anus as his Bernanke. 

Daddy....need more Bernanke itch. 

Kids say the damndest things. 

Charles Nelson Reilly's picture

My soon to be 3 yr old just got potty trained. Saving diaper $ is nice. He however will occasionally piss or shit himself... I've taught him to blame Bernanke.

Jack Burton's picture

My daughter knew her business at just over 2, my grandson got it down at 2 1/2. I read in the UK papers that primary school kids are turning up for first year classes in diapers. Jesus! My mother had me trained in my 2's.

Harbanger's picture

When you were 2 the women were still handwashing cloth diapers on the washboard. Disposable diapers didn't exist before the 60's

Grande Tetons's picture

Double post. 

Fuck the Fed. Fuck Banks. Fuck the Goverment. Fuck poilitcis. Fuck the dollar...fuck Bieber, Brittany, JHo,Cliton, Bush, Anderson Cooper...Lou the fat Pig Dobbs, Bill the Cumscuker Oreilly.......

Adios, for a double post...I am outtah here.......

Grande Tetons...RIP. 

Fuck you. Yellen! I hope Fonestar shoots a shot of manlove over your grey, sagging tits.

Sorry, Fonestar. 

prains's picture

fonestar only has an udder, it needs squeezing

drendebe10's picture

"There ain't nothing uglier than an old white woman." Fred Sanford

detached.amusement's picture

aint nothin uglier than an ol white woman with a printer

Agstacker's picture

But...the fed said that inflation is at 2%...

Rising Sun's picture

there are always buyers and always sellers

dirtyfiles's picture

hey Grande hot dogs & condoms fits a lot better (sarc)

CrashisOptimistic's picture

Well, almost.

Energy is a word used to cover up the discomfort of reality.

Energy doesn't feed people.  Oil feeds people.

Present that chart in the context of oil and only oil and we have something.

It will look significantly different.  For example, China elevates on that chart only because of coal, but the coal gets to the electric power plant on a truck fueled with . . . yes, oil.

Australia has no oil.

The US would also fall significantly on that chart were it constrained to oil.

On the other hand, there is nothing one can do definition-wise to save Japan.  They are pathetic and utterly hopeless.

new game's picture

what happened to our 200 year supply of coal?

magnetosphere's picture

fossil fuel inputs to agriculture (fertilizers, tractor fuel, refrigeration, etc) are only a few percent of total fossil fuel consumption.


china is expanding its electrified rail network.  that america is not working on this is a collosal failure of our political and economic system.

Tasty Sandwich's picture

At least all those empty cities will have train service.

I took Amtrak from Kansas City to St. Louis once as a kid.  I-70 is much faster and you have a car when you get there.

CrashisOptimistic's picture

There are no electric 450 horsepower tractors and you will not feed 320 million people with local food, because the farms that were once around the cities are now parking lots.

Oil feeds people.  It brings seeds to furrows and it brings food to shelves, and nothing else does.

magnetosphere's picture

biofuels can power tractors and fertilizer production while using a small fraction of the land, of order 10%.  freight transport by rail is 10x more efficient than road transport, and water transport is up to 70x more efficient than road transport, so maintaining food production and distribution without oil is absolutely within the realm of possibility.  and we will have enough oil for food production for several decades, especially if we stop wasting it on other things.


and yes, it is possible to make electric tractors and trucks on physical grounds, though they would be very expensive.

CrashisOptimistic's picture

And yet there are no electric 450 horsepower tractors.  All these things can be done, allegedly, but they are not done.  When were you planning to start?

What's the joules ratio on biodiesel produced at a proper amount, that is oh, 20 million bpd?  Have you fueled even one 75,000 acre farm's production that way?  No, eh.

When you work out your rail transport calculations, be sure you throw in refrigeration for the food in the power numbers, and be sure you get the product to market no slower than diesel fuel can do it.  If you don't, you fail.

You're not allowed at any point of the calculations to say "we don't need that" or "it can be done with less".  You don't impose your preferences in your calculations.  Those are not pure calculations.  You think you can "replace", show me the joules equivalence.

Uber Vandal's picture

How did we do it 100 years ago with steam locomotives, or pull refrigerated cars that were cooled with ice?

How did farmers plant vast fields with steam tractors?

Yes, steam is labor intensive, which was its Achilles heel, and obviously not PC either for who wants to have soot all over the place (coal is evil, and the US was cursed with so much of it <sarc>), and all of the oil and grease that goes with lubricating the parts of those old engines,

In the 1930's, we had 100+MPH steam powered locomotives on jointed rail track, without computerized anything, and as I said in a prior post a while back, railroads such as the Milwaukee Road, Great Northern, Virginian, Pennsylvania, New Haven, and others had Electrified locomotives, some traveled routes that were over 600 miles long, dating back to 1915, and in some cases earlier.

What has been done, can be done again.

Or, are we so far past the point of no return that we might as well stock up on assless chaps, chains, and hair dye.

zhandax's picture

There may not be any 450HP tractors that run on electricity, but there are plenty of 450HP diesel tractors that will run for about a year on the oil from 2.5 acres of sunflowers.  We once again let a bunch of criminal corporations put an idiot in the White House and they have dictated ass-backward priorities for their own profit.

petolo's picture

Having been a "horse-farmer" all my life, i can tell you those 450 are not real horsepower. I dare say, two dozen horses will outpull any 450 hp tractor with no pollution or soil compaction.It's all about tractiontraction . I have seen a single horse drag aa utility vehicle around like childs'play. Out West 40 horses used to pull huge combines over all kinds of landscape.

Of course finding teamsters, blacksmith's and harness makers might pose a problem but it would be worthwhile to employ those cellphone tappers to do some meaningful work.Yes, with a team of horses, WE CAN!