Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Peak oil and retirement

By Michael Lardelli - posted Monday, 6 October 2008

Stockmarkets are plunging worldwide and retired people everywhere are watching with great discomfort as the value of their investments decline. Declining retirement incomes and inflating food and fuel prices are placing great stress on the elderly. The current dramatic volatility in the oil price is symptomatic of the tight supply (amplified by speculation and the current financial chaos) and is what one expects as the world peak of oil production is approached.

For many of us in the middle of our working careers the state of the stockmarket may not be as immediately worrying. However, the Australia of 2020 and beyond into which we will “retire” will be a very, very different place from 2008.

In only 12 years time Australia’s oil production will be but a small fraction of its peak rate in 2000. More importantly, the volume of oil available to buy on the world market is predicted to be at least 30 per cent lower than today meaning that oil prices will be far higher. (And if high oil prices are causing us to run a trade deficit in these commodity-export driven boom times then imagine the consequences of oil at far higher prices!)


There will be few private cars on the roads, and problems with food production and supply will drive a great increase in local growing of food (urban agriculture). We will be in the process of transitioning (with difficulty) to a society functioning (or “dysfunction”ing) at far lower energy levels compared to today. At the same time a growing cohort of elderly will be faced with fewer younger (productive) people in the economy to provide them with services.

What does declining energy availability mean for those of us entering retirement age beyond 2020? If we have some retirement savings now, what should we do with them? Will we be able to retire at all?

To understand the implications of energy decline for our retirement we need to understand the essential interconnection between energy and money. Contrary to common belief, money does NOT make the world go around. That is the job of energy. Energy is defined as “the capacity to do work” so any thing that happens anywhere at any time happens because of energy. Money is only useful as a means of controlling access to energy.

The world past 2020 will have far less available energy. Since the number of people will probably be greater, the competition (demand) for each energy unit will be higher and so will its price. Simply put, the power of each saved dollar to provide access to goods and services will be far, far less - and that is without considering the accelerating monetary inflation that is currently destroying the value of our faith-based (fiat) paper currencies.

Many nations, including Australia, currently have annual increases in money supply 10 per cent or more above their economic growth rates. (Note: If inflation is caused by an increase in the money supply without corresponding growth in economic activity then a decrease in overall activity due to energy decline without a decrease in the money supply must also be inflationary.)

Of course, factors other than energy will influence how we invest for retirement. For example, from a very pessimistic (but I would say realistic) point of view, it is difficult to see how we will be able to maintain the computing systems upon which modern finance has become dependent for more than a couple of decades. This is due to the fact that manufacturing the microprocessors at the core of these computers is a technically challenging activity requiring a globalised high-tech manufacturing and supply network. (Just because microprocessors are nearly ubiquitous does not mean that they are not very sophisticated devices.) The vulnerability of microprocessor manufacturing has been described in an extremely interesting essay, “Peak Oil and the Preservation of Knowledge” that everyone should read.


If modern computing fails then so does the stockmarket and modern banking and all those hard-earned zeros in our pension accounts will evaporate as if they had never existed. Hopefully the failure of the finance and banking computers will proceed in a piecemeal manner since a rapid seizure would see a very rapid descent of our society into chaos.

The intention of saving money for retirement is to have something to provide in exchange for access to energy (as services) and “embodied energy” (as goods) when one is too feeble to work for them. (Embodied energy is the total energy used to source materials for, manufacture and distribute something.) However, as explained above, paper and virtual money (numbers in a computer) or ownership of shares in today’s companies (most of which are dependent upon abundant, cheap energy and global logistics to function) are almost certainly not secure forms of savings.

Probably the most secure form of retirement saving is to purchase things/assets (which represent embodied energy) now that may still be in demand when one becomes too old to work. In a world threatened by growing food shortages it is interesting to see how the most fundamentally valuable asset of all - good agricultural land and the water that makes it productive - is rapidly rising in price.

When planning for retirement in a post-peak oil world a new attitude is needed.

We must remember that the concept of “retirement” is actually a recent invention. When the old age pension was introduced in Australia in 1908 the pension age for men was 65 years but average life expectancy was 55 years. Today, average life expectancy (for men) is nearly 78. In 20 years’ time the current era of near-universal retirement will be seen as a brief and unusual phase in human history when cheap, abundant energy relieved many of the elderly of the need to work for their entire lives.

In pre-industrial English society it was not uncommon for the youngest female child to remain unmarried with the expectation that she would care for her parents in their dotage. But in an overpopulated future world starved for energy and food that would be a luxury - and our children currently expect more personal freedom in any case. In that post-peak oil future perhaps the best thing we can do to enhance our children’s survival (when we can no longer support ourselves through employment or by growing our own food) is to hand them the assets we saved for retirement and then get out of their way. After trashing the planet that is probably all we deserve.

  1. Pages:
  2. Page 1
  3. All

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

15 posts so far.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Michael Lardelli is Senior Lecturer in Genetics at The University of Adelaide. Since 2004 he has been an activist for spreading awareness on the impact of energy decline resulting from oil depletion. He has written numerous articles on the topic published in The Adelaide Review and elsewhere, has delivered ABC Radio National Perspectives, spoken at events organised by the South Australian Department of Trade and Economic Development and edits the (subscription only) Beyond Oil SA email newsletter. He has lectured on "peak oil" to students in the Australian School of Petroleum.

Other articles by this Author

All articles by Michael Lardelli

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Michael Lardelli
Article Tools
Comment 15 comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy