Peak Prosperity - Economic Collapse Approaches

Episode Date: May 31, 2025

The US economy is on a collision course with geology and physics always wins. The reason is as old as recorded history; the humans in charge have the wrong story in their minds. Peak Oil is now a reality, but that hasn’t penetrated the decision-making halls of power, as evidenced by the headlong rush into power-gobbling data centers, and the passage of blow-out deficit spending bills.Click Here for Part 2

The United States is now on a collision course with an economic crash. I don't see any way to avoid it at this point in time. The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content. Hello everyone, I am Dr. Chris Martenson of Peak Prosperity and I am pleased to be with you today.

We're going to be talking about this, the coming coming economic crash and any of you who've been following me know my basic thesis is that? Look money is a human construct It's a thing that we use to measure things But it's not real wealth real wealth comes from real things and we know that because when we look at say oil consumption and GDP Seeing up the y-axis up there we have 2020 GDP in billions. It's a log scale. 2020 oil consumption across the x-axis and again in a log scale expressed as billions of dollars versus millions of

barrels per day consumed by countries. You can see all the way out here we have the United States very much on the far end of this, then and Japan rush all this but look at this it's a straight line it's a straight line the implication is easy if you want more economy you're gonna be burning more oil and that makes a lot of sense intuitively right because when you look out across the economy what do you see you see planes in the sky, trucks on the road, goods that you can buy, food in the store,

every one of those, when you strip it back a little bit, has oil as part of its production, distribution, manufacture, and final disposition. That's it, oil, oil, makes sense, okay. That makes sense, but we could look at it too in terms of electricity on the Y-axis. This time we have electricity consumption per capita and across the bottom GDP income national income GP per capita

Again log scales you will notice that there is no such thing as a low energy rich country because these are richer countries as we Go out this way more GDP per capita richer, and this is more energy So this would be low energy Rich no such thing as a low energy rich country if any country in the world had figured out how to be rich Without using energy or electricity in this case you would see a dot in here somewhere But you don't and that too is instructive energy is everything. This is now going to come back on the landscape for a lot of people Just is roaring roaring back in a, big way over these next few years for a number of very big reasons and I'm going to be putting out an extraordinary investment thesis for my subscribers connected to this set of ideas.

But everybody needs to be aware of this, that's why I'm putting this part out in public. And by the way, all public data, it's just how you put it together. Would you look at that? Global debt has now reached another new record of late public and by the way all public data it's just how you put it together. Would you look at that global debt has now reached another new record of late from BFA global research we now see that there's over 324 trillions 324 trillion in debt in Q1. So all that debt needs to be paid back. Obviously, you go into debt today, so you can consume today,

so that you can pay that debt back when? In the future, okay? Well, when you pile up more and more and more and more debt is a constant kind of an idea, you might do that as a young family. You say, oh, we can go deeper and deeper into debt because we're gonna pay it back. But you wouldn't go deeper and deeper and deeper into debt

as an aged person in a nursing home unless you had no intention of paying it back. So the question is, how are we gonna pay all that stuff back? Well, that's easy to answer with energy because we pay back the debt from future production and output, which is GDP, which means we're gonna use more oil, more electricity to pay back all this debt. That's the story I hope you're following along. That's the story that all of our leaders air quotes time have been

Assuming is gonna be true But is it and that's what we have to talk about because of course the account we pay all that debt back I mentioned is GDP, but now when we look at for the United States alone this is GDP and red down below this is the total amount of debt now well north of a hundred trillion dollars just in the US and I think you can clearly see this blue line is growing in a much faster clip steeper line then the red line down below hmm How can you grow your debt forever faster than your income? Well, you can't. You can't do that as a family, a company, a town, a municipality, a state, a country. It doesn't make sense at any level. It doesn't suddenly make sense because we're a country that we can do this,

but it doesn't make sense that you can't do that. Right? Obviously, it doesn't make sense that you could do that. I should say as a family. so this has been staring us in the face for a very long time and you've heard Scott Bessent say it you've heard Jay Powell say it this is unsustainable one cannot grow one's debts faster than one's income forever now this is why we're in trouble because the Trump administration has just thrown in the towel on any fiscal restraint they've put forward the big beautiful bill it has the most aggressive expansion of that top blue line, which is total debt, but federal debt in this case, a component of that blue line is now going to be expanding at two to

two and a half trillion dollars per year for the next 10 years. We're just going to be piling it up and they say, oh, we're going to make it back on the denominator in this story by growing GDP The numerator on top there's a blue line denominator is the red line. That's the Trump plan. Hey throw in the towel fickle fiscal recklessness Reckless fickleness if you put all those words together and that's the plan now. Is that a good plan again? It all depends on how much energy you have If you have tons of energy and we have endless amounts of energy going into the future sure you it might make sense I still want some details like which industries are we gonna go are they oil dependent because then we're gonna have to talk about how

Much oil we do or do not have are they electricity dependent then we have to ask the question What's the fuel source for that electricity and can we distribute it cheaply? Well, that's the question all that debt What are we going to do now? It's not just debt There's one more element to the story and also includes things this story includes things like on or under funded liability social security in the United States Medicare Medicaid the RSP in Canada the postal system in Japan whatever your retirement

situation is in your country it probably has some a chart that looks a lot like this the total IOUs is what we would call this in the United States here total IOUs includes government debt and private debt now north of a hundred trillion those two together We've got pension liabilities. That's not debt. It's just that we have a mismatch between assets and future expenses So we call that a liability. We have other mandatory government stuff. We got Medicare. We got Social Security when you add all that up is Who did this I think this was Bridgewater. Yeah, Ray Dalio's Bridgewater made this chart. Look, this only goes to 2018. It's probably worse today by a lot. You can clearly see that we were well over 1000% of GDP, meaning 10 times larger than GDP. Nobody's ever dug

out from that many IOUs. The only possible way to pay those back is to really grow the economy, which as you now know, a derivative of that is to say we need to really grow our energy consumption because that's how you grow your economy. All right. That's just how the story has been. Maybe AI completely changes that but Not so quick AI also consumes a lot of energy and it's gonna put a lot of people out of work So I'm not really sure that's a growth story as much as it is a deflation story

But that's another story for another day, by the way We talk about that at peak prosperity all the time and by the way all the base inputs that we need To grow our economy like copper major copper discoveries. You can see here starting in the 1900s They were this is depth and meters go starting at zero. So we just found the stuff right on the surface. That's the easiest That's that's where you want your copper just lying around on the ground best place to find it So we had copper here at zero meters here It is 500 meters underground going down to a thousand meters a thousand meters underground 3,000 feet more than a half a mile at any rate. This is 1900 going in through 1920 look at this through 1940

We're still finding them the size of the bubble is the size of the fine so really huge copper discoveries here smaller ones, but still on the surface Hey other big ones still on the surface Oh, they're starting to get a little deeper underground here the S gone D to mine the Spence mine Oh look at the size of the discovery the Olympic damn nine here in the 70s Etc I think you can clearly see the shape of this the The bubbles are getting smaller and they're getting deeper. That just means we're going to put more energy. We could call it money, but money is a derivative. It's just a second order derivative.

Energy is the primary currency. Money is a marker we use to sort of keep track of it. This is just getting more expensive. Energy terms, dollar terms, you be the judge whichever way it makes you feel better But energy is the master story here and now we got to talk about this because energy blindness is a very serious problem in this country in the world and It's not that hard to get through it really it didn't have to be this way The understanding the energy concepts is fairly simple and all of our politicians, leaders,

administrators ought to go through some sort of an energy school that ought to just be part of life because energy is everything. It is the master resource because our politicians for the most part are completely ignorant about energy. They don't they just don't know what they don't know and as Mark Twain said you know what it ain't what you don't know that gets you in trouble so much as it's what you know for sure that just ain't so so here's something that I think everybody knows for sure who's in a leadership position in our country and

a lot more besides maybe the world they just know that look whenever we get tight on oil or gas or something we just find more and that's what we know now anybody can logically conclude after looking at that topic for just a little while that that's not actually true that in fact these are finite limited things and that there is there is a running out someday. Okay now, maybe that day isn't today But it's coming soon. That's what this whole presentation here is about today, by the way for my members Here's a three five six said this subscription is worth every penny if you want to subscribe and find out everything I think about what's coming and how to get prepared for it You go to peak prosperity comm slash membership and sign right up. It is the best value for your money today

Information is powerful and I don't just give you information Of course, I put it in context so you can make sense of it as Beverly Elliott said Thank you, Chris Thank you so much for explaining these complicated issues in such an easy to understand way You have a real talent for it Whether it is kovat research paper a vaccine trial oil reserves or money markets You always present the info in simple language with a full explanation. I can't tell you how valuable this has been to me Over the past two and a half years

I am better prepared more knowledgeable less anxious and more resilient than before, in large part because of the knowledge I've gathered gained from you. Thank you for that Beverly. This is a very typical sort of a testimonial that I do get. This is what I do. I'm at the peak of my abilities in life to be able to find these dots, complicated things, distill them, and explain them so that you can walk away with them. I'm very clear about this I'm not interested in the guru model, which is I could clearly talk and here's what a guru does They talk and sounds really exciting might be pretty animated even You'll go wow that guy was really smart and it's full of jargon and there's complicated ideas and I'll use phrases that

Almost makes sense, but you're not really sure we share the same meaning of And at the end of it you might even come out and go wow that was an amazing presentation, but you'll walk away Not knowing anything somebody will say what did he talk about and you'll go I can't quite you'd have to watch it when you experience that that means you've Been in the presence of somebody who's operating in guru mode. I don't do that. I'm in share mode.

I'm here to help you understand. I'm here to guide you towards better understanding. I'm in guide mode. And you'll know that because you will come away from my presentations going, here's what he said. And I hope if I'm not meeting that, let me know because I work very hard to get this all right. So guess what?

Most explosive news ever, May 17th, most explosive because this has been obvious and I've been talking about this for 15, 20 years now, but now it's in the Wall Street Journal. So I think now we can talk about it, which is again, a narrative story and construct. It doesn't had nothing to do with the data suddenly becoming more clear or the concept suddenly changing It's just now in a narrative structure. We can talk about it and by the time it's in the Wall Street Journal We're allowed to talk about it US driller says the headline here say peak shale has arrived peak shale May 17 2025 now this is a big deal. This is a really big deal and 17th 2025 now this is a big deal. This is a really big deal and

Because you're hearing about it here and listening you are way ahead of the pack. So congratulations It's a great place to be From that article it said quote the US is on track to see crude oil production modestly increase in 2025 in part because of growth in fields offshore So not even due to shale before declining next year by 1% to of growth in fields offshore, so not even due to shale, before declining next year by 1% to 13.33 million barrels a day. Well, what's the big deal? Chris, 1% is just a little wiggle in the chart, right?

This is where the story gets fascinating. Quote, that would mark the first year-on-year decrease in roughly a decade outside the COVID-19 pandemic. More from that article says production growth in the Permian is slowing and the Permian is one of the shale basins. It's in Texas primarily and West Texas and it is by far the story. There's lots of shale basins. Maybe you've heard of them like the Bakken, which is an oil and gas play or the Marcellus,

which is mostly a gas player, the Utica or the near brara or the anadarko These are all different shale basins, but the Permian that is the king among kings right? It's absolutely the place that we want to keep our eyes on the Permian Before any others because as goes the Permian so goes at all at this point Quote production growth in the Permian is slowing So goes at all at this point quote production growth in the Permian is slowing Ding ding ding warning bells Klaxons going off the region's output grew by fewer than two hundred thousand barrels a day over the past twelve months compared with

average annual growth of more than 630 thousand barrels a day since it started booming in 2017 according to the US EIA. The next two largest onshore oil fields, the Bakken Shale in North Dakota, the Eagleford Shale in South of Texas, never fully recovered after the 2020 pandemic production there has flatlined for years. Well, that's what happens when you hit peak oil, it sort of flatlines and then it goes down. In fact, both the Eagleford and the Bakken haven't really flatlined

They are down from their peaks, so they are past peak Eog resources continuing on in the article here Quote says one of the pioneers of shale has about three to four years worth of high quality locations to drill wells That's it three to four years, and it's kind of like now they're drilling sort of substandard locations which means you get less oil per well which means the drill costs being what they are, the oil becomes more expensive. You get less out for the same amount of money. It's more expensive.

Quote, after that inventory is drilled, EOG will have to keep finding ways to cut costs, very hard to do, because the quality of its inventory declines Corporate M&A is the problem solver they say here and EOG of course declined to comment on this. It's worse than this It's not just you get the read the article even though it's a big giant Screaming siren for me that they're even talking about it What they're not talking about is this which is that the average monthly declines in the tight oil plays So if we took all the shale oil plays, we said we're not gonna we're not gonna drill I just stopped drilling today in one month

There will be six hundred and sixty thousand fewer barrels coming out of the ground in just one month and the month after that another Barrels coming out of the ground in just one month and the month after that another 660,000 fewer barrels coming out of the ground more or less starts to slow down as you go through that but the point is Super wild like like in order for output to grow by 200,000 barrels. They had to offset the 660 Plus add another 200 so you actually have to add 860,000 barrels per day Per month to keep all of this working. It's just a remarkably astonishing Drill program so you got to keep running have to keep the rigs up got to keep going alright now in

2023 The EIA the Energy Information Agency of the United States, they have an annual energy outlook. It's a great thing. Really big, really meaty, comprehensive report. I'm so glad they do it. Thank you for doing it. But in 2023, here's what they were projecting for petroleum and all other liquids.

They were saying, well, you know, they're kind of going to go up and then, you know, it just sort of like start to flatten out a little bit. But they keep going up here all the way to 2050 and what's the reference? The reference case is what you might call a base case. They also have a, well, what if there's a lot more oil and gas than we think? Or what if there's a lot less than we think? What if the high oil prices are really high? What if the oil prices are really low?

Right? So they run all these different scenarios from this dotted line here when they run their annual energy outlook. But their base case. these different scenarios from this dotted line here when they run their their annual energy outlook. But their base case, all things being equal, oil prices don't do anything goofy, supply is doesn't do anything surprising. And they say, well, you know, it just continues to wobble up. In fact, it goes up about 10% between, say, when they ran this in 2022, when they ran the study, all the way and up till 2050 Okay, that's what they thought in 2023

Oh, what a difference a couple of years can make now from their annual energy outlook in 2025 They now suddenly changed from oh Total energy production from oil and lease condensate hits a peak here starting in 2027 Flattens along for a while and right around 2030 now. They say it's a 20% drop by 2050 Yo, that is a peak yo So the question I have is well how much further do we have to go to get to the truth? 2023 10% gain 2025 20% loss. What will it be next year? Regardless of whether it's a lot less than that a lot more than that

The point is that we're at a peak of production, which is a big giant change of narrative It is an enormous change of circumstances. It is a completely new situation Everything you think you know about what inflation is how economies work about what inflation is, how economies work, what the future might hold. If you're basing that on the last 15 years of US energy production, that's not a good model to have. Whole new world coming before us, just a different world. Not saying it's ending, but it's a whole new world. And it's hard to get our minds around this, but it's important to. The markets are unraveling and the stakes could not be higher. If you're relying on

passive strategies or so-called diversification, or perhaps using an advisor who was, I don't know, maybe in elementary school during the great financial crisis, you could be on a collision course with staggering portfolio losses. Peak financial investing is your lifeline. We handpick wealth managers who will actively manage your portfolio with proven, market savvy strategies, not the tired modern portfolio theory that could crumble under pressure. The unprepared will not just lose this time, but lose big. The future that I see consists of both winners and losers, but many more losers this time than last time. Go to peakfinancialinvesting.com today and schedule your free consultation.

This is your chance to protect your wealth. Again, that's peakfinancialinvesting.com and I'm Dr. Chris Martenson urging you please don't wait another day. Now I consider this a chart crime because this is often how it's presented. You can see here that the United States was growing and growing and growing its oil output. We were just an economic monster right here the 50s and 60s that people want to go back to the make America great. That's because we were growing high energy oil output What do I mean by high energy? I mean that it took very little effort to get a whole lot of oil out of the ground

So therefore we had a lot of surplus oil energy kicking around We didn't have to have plow a lot of that energy back into getting energy. So high net energy That's what we had here. And this is what we call the golden era You could work with one person in a minimum wage job And support a household was crazy things started to get harder and harder and harder here And then the shale revolution came along and now people are saying oh see that proved that Pecoil wasn't actually a thing and this is unnecessarily unsophisticated View and it muddies things up. That's why this is a chart crime the more accurate chart

Thank you art Berman for putting this out of labyrinth consulting looks like this in fact We see that we saw that peak right here that first peak is this peak right here And you see this second little peak that happens to be Alaska coming online, right? This is the cheap stuff in the green This is the cheap high net energy oil stick a straw on the ground and a whole lot of it comes out The straw doesn't have to go down all that far. You will notice that since 1970 Alaska's conventional offshore is offshore, but I still consider it conventional This is just conventional means a straw stuck straight in the ground oil comes out

That peaked in 1970 and has been going down ever since the only reason this chart goes Skyrocketing back up is because of this red part. That's called tight oil. That's shale oil You get one shot at shale oil and then it's over baby. It is done once it's drilled out It is gone like that is it that is the source rock There's nothing below the source rock. There are no additional source rocks We don't have any new shale basins that anybody knows about. Can we get more clever about trying to squeeze more out of that, you know, twist the sponge a little harder down there? Maybe. But all the estimates I have say, and everybody

in power is expecting this red line to just keep doing this forever. OK. But all the estimates, all the analyses I have, say that it actually probably the future looks like this. That we're right at the tipping point, right about here. It flattens out. That's just a couple of years, now to 2027 or so. It flattens out, and then it starts to go down. We'll hold up. If oil is the economy, if energy is the economy,

and this stuff is now going to run out Where is the United States going to get its energy from? Now I think you begin to understand what you've been hearing about Trump saying Canada the 51st state actually I don't think Trump wants Canada. I think he's very interested in Alberta I think that the oil that's left down in Venezuela in Gu Guiana, in Suriname, in Brazil, in Argentina, that's going to become exceedingly interesting to the United States as we go forward. This is a mad scramble now that's about to get kicked off and it has enormous implications. Now, the shale basins, here they are.

All those over there on the far side, over there, side of things the Bach and Neobrach and a dark Oh Permian those those have a lot of liquids in them So we'll call that oil the Haynesville and the Appalachian bases almost entirely Natural gas some of it's a little wet meaning it's got some ethane and propane, but but that's it okay Now this is gearing and Rosen schwag Adam Rosen schwag, and I have had a series of podcasts I love what they do how they think this is from their third quarter report here Oh No, I'm sorry. I have the wrong title down there. This is actually from their first quarter

2025 commentary it mostly goes into platinum You should take a look at that, but they do have a piece in here where they're writing and continuing to write about oil and gas and they say here quote some have tried to pin the blame for declining US production on low oil prices a Familiar refrain in a cyclical industry, but in our view the cause runs far deeper We are witnessing not a temporary slowdown driven by market signals, but by something more enduring geological exhaustion. Now, if they're right, end quote, if they are right, this is earth shattering news. And you have a few years to prepare for it at most, but this is going to change things

enormously. Big stuff, if they're right. So battle it, test it, challenge it. Let's wrestle with it. That's what we do at peak prosperity. Just constantly trying to figure this stuff out. Carrying on quote, our neural networks first raised the alarm in 2019. Well, before it was fashionable or comfortable to do so, they suggested that

at prevailing drilling rates, the most productive parts of America's shale basins would be largely exhausted by 2025 if not sooner So they developed models a neural network model fed all these inputs in their models said back in 2019 said Mmm about 2025 you're gonna see these things begin to peek out and roll over So that it was not very well received at the time people like, Saudi America, this is this that red line goes up forever. Carrying on quote, the data have since borne that out shortly after our initial warning. Well, productivity, well, productivity is the important thing measured by initial production per lateral foot peaked and began to decline.

Nowhere is this more evident than in the Permian Basin, which has quietly shouldered the burden of nearly all shale growth in recent years. And in fact, in that piece down below, which is from the third quarter of 2024, they lay out what they call the depletion paradox, that once well productivity starts to decline, there's nothing you can do about this.

You will get less and less and less oil out of the ground. Throw more rigs at it. Drill faster. You can do about this you will get less and less and less oil out of the ground throw more rigs at it drill faster Paradoxically once you're in the decline phase meaning your well productivity is going down the more of them you drill the more you kind of Get behind the eight ball in this story. It's a very paradoxical story It's worth checking out and I will go into that more detail in part two carrying on quote, but And I will go into that in more detail in part two. Carrying on quote,

but even the Permian has its limits. Since June, 2021, initial production per foot has fallen by more than 15%. And the trend shows no signs of abating. As the core acreage grows ever more drilled out, productivity will almost certainly fall further. And as any longtime student of the oil patch knows, when a field begins to decline for

Geological reasons no amount of capital or technology can restore it to growth Based on current rig counts our model suggests the Permian production could fall as much as by as much as 400,000 barrels per day by year end it's not a small dip but rather a meaningful shift in the global supply picture end quote I'll say, could it fall that much? That would be a lot. Guess what? Rigs are being stacked. Layoffs are already hitting.

Prices are not supportive of more. Here we see up here, per me and rig count about 350-ish. Back here in 2023 has collapsed all the way down to about 200 and let's call that 80 So that's a very big decline the fracking crews out there. So average fracks 287 all the way down to 193. That is a big giant decline the EIA in their short-term energy outlook the STEO They said here in March. They were saying oh, we're gonna see this much oil coming out of US, you know oil And then in April they're like maybe this much and then currently they're like, oh maybe this much So they are constantly revising down the amount of oil that's coming out This is consistent with what garing and Rosenshwag have been predicting. So if this is true, this is the most earth-shattering

news for us Everything our financial markets our markets, our sense of prosperity, how expensive things are going to be inflation, everything hinges off of this. So who has it right? Who has it wrong? Couldn't be a more important story. It's weird that I'm the guy talking to you about this rather than the president, rather than the energy secretary, by the way way the layoffs have already begun there. So That's where we're we are in this story and now it gets really fascinating because well I this is where the investment thesis really picks up the pace because now we have data centers

We have what's called liquid neckNG or liquidified natural gas, we have exports. This is all leading to an energy crisis. I see is gonna get really phenomenally difficult by the year 2030. I'll take you through all of that thinking if you are a peak prosperity subscriber. If not, I invite you to become a peak prosperity subscriber

because hey, we're always looking at where the world is going and I can guarantee you this as your information scout I will bring you to information and news Well before you hear about it or read about it elsewhere Which can give you an edge and as well I will also provide more context than most people because I'm a pretty well-rounded guy I got I got a lot got my fingers in a lot of different pies So I understand the psychology of the markets

I understand the psychology of why we have to adjust to these rapidly changing situations I understand where things are going and how to tie those all together So if you want to become a peak prosperity subscriber love to have you if not, that's fine, too We'll see you here out in the free space from time to time with that Thanks very much for listening and I'm going to dive into part two now for My subscribers until next time bye bye you