Predictions for 2015 and beyond

A Merry Christmas and a Happy New Year to all my readers! As this is the time when people traditionally make their predictions for the coming year, I am going to get in on the act too. Here are my predictions for the next 1, 5 and 25 years. Remember this is just for fun, so don’t go and sell your house or give up your job on the basis of what you read here. However, I would suggest that now is a good time to convert some of your assets to gold bullion in quarter-ounce denominations, if you haven’t already done so.

Next 12 months

I expect no significant change from the last 12 months. Sorry if this a rather more boring prediction than some of the other prophets of doom out there. Oil, gold and silver prices will continue to be unstable but with a slow underlying drift upwards. Political, economic and media leaders will continue to talk up an economic recovery while the economic situation on the ground slowly deteriorates. Atmospheric CO2 levels will continue to increase. Weather patterns will continue to be unstable. Global population will continue to increase. Global debt will continue to increase.  Proxy wars will continue to be fought in various parts of the world, ostensibly about liberating the people from communism, capitalism, fundamentalist Islam, or whatever, but in reality the root cause of these wars will be access to resources.

Next 5 years

It is fairly clear that peak conventional oil occurred around 2005. This passed largely unnoticed because the economic recession reduced demand, and the decline in production of conventional oil was compensated for by increased production of unconventional oil (fracking, tar sands and heavy oil) which was previously uneconomic to produce. These compensatory mechanisms cannot last, and I would expect total world oil production (conventional plus unconventional) to peak out around the year 2020 and decline thereafter. The decline will be slow at first but will gradually accelerate, and will be accompanied by increasing cost and shortages and economic and political disruption.

Next 25 years

I am going to talk here in some detail about the breakup of Canada. This is not because I think Canada is more important than anywhere else, but because I live here and I therefore have a feel for what might happen. I wouldn’t presume to make predictions for the 25 year future of, say, the United States or the United Kingdom, but if any readers have their own ideas about what might happen to their own countries, please post them here because I’d be very interested to read them.

I’d like to start with an analogy of throwing a ball. If you throw a ball into the air, you can predict its trajectory with considerable accuracy. It will reach peak velocity as it leaves your hand, it will gain height and lose speed until it reaches peak height, and then it will follow a trajectory of increasing speed back down to earth, unless a “black swan” event occurs such as the ball landing on a house roof, or being caught by a passing bird. You know that it will follow this trajectory because you have seen it happen many times before.

It is more difficult to predict the precise shape and timing of the trajectory, and at what moment the ball will return to earth, because this depends on many variables including the weight and shape of the ball, initial velocity, angle of throw and wind speed.

So with Canada, we can predict with confidence that at some point the country will break up, for the simple reason that all countries, empires and civilizations are in a constant (but slow) state of flux, and all eventually break up. For examples, see the Sumerian Empire, Assyrian Empire, Persian Empire, Greek Empire, Roman Empire, Turkish-Ottoman Empire, Spanish Empire, British Empire and so on.

Predicting the timing of the breakup is much more difficult because of the numerous variables and unpredictable factors involved, which are far more complicated than throwing a ball. Here is my best guess, but I could be out by a couple of decades either way.

Canada consists of ten provinces and three territories, and my guess is that the breakup will be initiated by the most oil rich province, Alberta. This may surprise Canada-watchers, who would probably assume that a breakup would most likely be led by Quebec (a largely French-speaking province) which has been talking about seceding from Canada for decades. However, the talk in Quebec is largely just that, talk and little action, it is not really in Quebec’s economic interest to secede, and the majority of the population have never supported it.

With Alberta, it’s different. This province contains most of Canada’s tar sands, and derives most of its income from mining those tar sands. As global oil supplies contract and become more expensive, Alberta’s tar sands will become more valuable and sought after. Alberta has already entered into long term contracts to supply oil to the US and China, and over time its economic interests will increasingly converge with those of the US and China, and diverge from those of the rest of Canada, which will expect it to supply them with cheap oil but bear the environmental costs itself. Eventually I can see Alberta either pursuing independence so it can keep the oil revenues for itself, or being coerced by economic or military force into a de facto union with the US or China. If this occurred, it would also probably cause a de facto separation of British Columbia from the rest of Canada, because geographically it lies on the other side of Alberta. I think there is a high probability of this happening in the decade 2030-40 but, as I said, given the difficulty of timing the future, I could be a couple of decades out either way.

What are your predictions for the futures of your own countries?

Good luck and don’t forget the gold

Peter