In a paper published last Wednesday, Jeremy Grantham writes that spikes this steep in the price of oil have historically always resulted in a recession, and more challenges are on the way for the world’s economy, reports an article in Bloomberg. Resource prices will keep going up, Grantham continued, which could slow down growth as well as disrupt geopolitical systems around the world.
Noting that “…most ancient civilizations were brought down by overuse of their resources,” Grantham pointed out several other possibly disturbing trends: that the war in Ukraine could cause food prices to spike, emerging markets will contribute to “repeated commodity boom cycles” in their quest for growth, and that a recession will trigger a decline in commodity prices. That recession, Grantham said, could be temporary if countries finally begin to take action to reduce their usage of finite resources. “Although we live on a finite planet, we have been attempting for the last 250 years to do the impossible: to generate perpetual compound growth,” the article quotes Grantham’s paper.
And while the interest in renewable energy is a step in the right direction, governments and businesses have to invest significantly in the research and development around climate change, Grantham maintains, in the article’s conclusion.