This article is the second in a three-part series on America’s energy crisis. See part one: How Energy Made the Modern World.

Massive, unprecedented debt burdens have been building up in America since the middle of the 1960s to facilitate ever-increasing social and military spending. The U.S. debt clock shows that the country has $117 trillion in unfunded liabilities. That total is in addition to the $20 trillion official debt when the liabilities of the nationalized Freddie Mac and Fannie Mae are included.

Indeed, similar debts exist for most Western economies, which did not distinguish between self-liquidating debt, incurred to fund projects that pay back the debt out of net revenues generated by the project, and debt incurred to facilitate consumption.

The only way to repay all of the debt incurred is to expand the economy. But the rate of economic growth required to pay the debt, even to pay all of the interest incurred on the debt, would be substantially higher than we ever have reached before for any extended period.

The U.S. gross domestic product (GDP), essentially all the goods and services produced every year, has grown at the inflation-adjusted rate of about 3 percent annually over the last one hundred years. As a result of that rate of exponential growth, the U.S. economy doubled in size about every twenty-four years. U.S. debt, however, has grown from $400 billion in 1920, in inflation-adjusted dollars, to $20 trillion today. That growth rate exceeds 5 percent per year, on average. But that average rate of debt growth over the last ninety years includes years in which there were surpluses or the debt’s rate of growth was de minimis. Today, the growth rate of the national debt is approaching 20 percent per year. According to CBS News’s August 22, 2011, “Political Hotsheet”:

The latest posting by the Treasury Department shows the national debt has now increased $4 trillion on President Obama's watch.

The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion. It's the most rapid increase in the debt under any U.S. president.

The national debt increased $4.9 trillion during the eight-year presidency of George W. Bush. The debt now is rising at a pace to surpass that amount during Mr. Obama's four-year term.

As of May 10, 2012, the official debt was $15.712 trillion, not including the $6 trillion in Freddie Mac and Fannie Mae debt.

Even more startling is the fact that this rate of debt growth excludes the even more rapidly rising unfunded liabilities of Social Security, Medicare and Medicaid and unfunded state-pension liabilities. When the $57 trillion present value of these unfunded liabilities is added to the “official debt," the rate of debt growth is more than twice GDP growth over the last ninety years. To repay the debt, even just to pay the mounting interest on that debt, we have to produce not only all we currently do to satisfy current demand for goods and services—we must produce much more. Take an average family, which must work to earn enough money to pay all its bills for food, clothing, heat, power and transportation. That is its current consumption. It also must pay the mortgage and credit-card bills for past consumption. If the credit-card and mortgage balances are too large, the family can never work enough hours to pay for current consumption and to pay off its debts. It has run up against the limit of time.

Similarly, if the world cannot produce enough surplus energy to expand the economy, meaning increased complexity and even greater specialization, the debt can never be repaid. It will have run up against the limit of energy. Stated another way, the economy would have to grow, ever faster, to pay off both past debt (official national debt incurred through past consumption) and accumulating, currently incurred debt for future consumption (unfunded Social Security and Medicare liabilities and unfunded state-pension obligations). But it wouldn’t be possible to produce enough conventional energy to do so.

In that event, society no longer would be able to afford the pharmaceutical research to invent that new drug to keep some folks healthy or even alive. It no longer would be able to fund research institutions and universities to develop the next big breakthrough. Society would not be able to spend scarcer resources on new technology. As a result, that technology would not be created. Food would become increasingly expensive to produce, so fewer mouths would be fed. The portion of work hours necessary to purchase food and other basics would increase. We are seeing that now throughout the Middle East. World food prices have skyrocketed, as commodity inflation, which reflects both reduced supply and increased demand, not to mention the central banks’ money printing, has put even one meal a day beyond the reach of many people there. Society will devolve along the same path on which it developed. This scenario is inevitable unless a new source of cheap, surplus-producing energy can be exploited quickly.

But America may be blessed in this regard. Between our two shining seas there lies the world’s greatest bounty of oil and natural gas. Only in the last few years has this magnificent bounty begun to be realized.

“We have the technology.” That line from the opening narration of The Six Million Dollar Man, the mid-1970s television series, is true when it comes to our ability to extract oil and natural gas from geologic formations once believed to be impenetrable. Let’s examine America’s aggregate-energy supply and demand.

Question: How much oil is consumed to run America’s transportation system? Answer: Nearly twenty-one million barrels (at forty-two gallons per barrel) every day. The United States, the world’s largest economy, uses 25 percent of the world’s daily output of nearly eighty-six million barrels.

Of the twenty-one million barrels used every day in the United States, twelve million are imported. Of this imported oil, some 10 percent comes from Saudi Arabia. Canada actually provides nearly 20 percent of U.S. imports. Mexico accounts for another 10 percent. But Mexican production is rapidly declining, so Mexican exports to the United States are likely to diminish substantially over the next five years. Nigeria and Algeria, along with the Persian Gulf States of Qatar and the UAE, account for about 30 percent. Hugo Chavez’s Venezuela provides about 9 percent. The Venezuelan portion, however, is likely to diminish also over the medium term because Chavez has nationalized the petroleum industry. He has extirpated Western oil companies and their expertise. As a result, Venezuela is unable to maintain production levels despite having plentiful reserves.

Of the 60 percent of America’s oil that is imported, how much actually is “dependable”? For a long time, it appeared Canadian exports to the United States were a “lock." That no longer is true because the Obama administration nixed the Keystone XL pipeline. The Canadians have turned their gaze 90 degrees west, to their customer of the future, China. As noted, Mexico and Venezuela are in decline. The 9 percent portion provided by Nigeria is problematic because that country’s oil facilities are subject to constant rebel attack. The supply of Middle East oil, whether from Saudi Arabia or other Gulf States, also presents a practical concern. The flow of that oil could be disrupted for many months if fewer than a dozen tankers were sunk in the Straits of Hormuz, the narrow sea-lane used by the world’s supertankers to reach the Indian Ocean from the Persian Gulf.

That would be exceedingly easy for Iran to do. With the level of current tension in the Persian Gulf region, ratcheted up by the potential for a hot war between Iran and Israel, oil prices already have been affected. But it is not only tension between Iran and Israel that threatens the oil supply from the Middle East. For years, al-Qaeda has dreamed of blowing up Saudi oil-transfer facilities on the Persian Gulf.

So, except for imports from Canada, assuming Canada continues to send a hefty portion of its crude production south despite the Keystone-pipeline debacle, up to 80 percent of America’s imported oil supply is in potential jeopardy on any given day. As a result, more than half of America’s daily transportation-fuel requirements could disappear. This would be akin to what happened in the 1970s, when the Arab states boycotted oil sales to the United States: immediate price hikes for fuel, gasoline rationing, spikes in unemployment and serious recessions. In the 1970s, the United States produced more than 60 percent of its own oil supply and imported less than 40 percent. Today, those figures are reversed.

In a nutshell, the U.S. economy would grind to a halt if a supply disruption occurred. Not only would gasoline and diesel prices spike, but the cost for all goods and services also would rise substantially, as elevated prices and diminished supplies rippled through the economy. Layoffs would mount. Of course, with layoffs come tax-revenue declines at both the state and federal levels, and the requirement for more government spending on the newly unemployed.