The End Of Civilization
www.countercurrents.org/eriqat130306.htm
By Dave Eriqat
13 March, 2006
Countercurrents.org
I had a mild epiphany the other day: it’s not President Bush who’s living in a fantasy world, it’s most of his critics who are. I’m no apologist for Bush – I neither like nor dislike him. He’s no more significant to me than a fly buzzing around outside my window. So permit me to explain my reasoning.
People look at Bush’s invasion of Iraq and see a miserable failure. But a failure to do what? Democratize Iraq? Eliminate Iraq’s WMD arsenal? Reduce global terrorism? If those were, in fact, the reasons for invading Iraq, then the invasion would have to be classified as a failure. But what if the real reason was to secure Iraq’s oil supplies, perhaps not for immediate use, and perhaps not even for use by the United States? Then the invasion of Iraq would have to be judged a success, a “mission accomplished,” so to speak.
Or take Bush’s seemingly irresponsible handling of the domestic economy. How can any sane person fail to understand that cutting revenue while increasing spending will produce deficits, and that those deficits cannot increase in perpetuity? Sooner or later that accumulated debt has got to have consequences. Bush appears to be acting as if there were no tomorrow. But what if there really were no tomorrow, financially speaking? In that case, the reckless economic policies of today would not only be irrelevant, but might actually be shrewd. I mean, if one knows that he is not going to have to pay back his debts tomorrow, then why not borrow money like crazy today? In fact, if civilization is coming to an end, then why not use all that borrowed money to stock up on guns and vital resources, such as oil?
Now, I’m just one person. And I’ve been closely studying economic, environmental, and energy issues for only a few years. And I’m no expert. Yet I’ve come to the conclusion – and I don’t want to be a “Chicken Little” here – that civilization as we have known it for the last century is doomed. Our wasteful manner of living – heck, the sheer size of our human population – is unsustainable. Everywhere you look you can see signs of strain on the Earth, from spreading pollution of the air, water, and land, to disappearance of life in the seas, to depletion of natural resources. Something’s got to give. Things simply cannot continue as they have.
If I can see this, I would guess the United States Government, what with its thousands of full time experts, probably can too. Now, if you are the government (and I don’t mean Tom “I am the federal government” DeLay), and your experts tell you that civilization as we know it is doomed, what do you do? Well, for starters, you do not tell your population of sheeple. That would precipitate panic and result in premature doom, which would consume the government along with everything else. Above all, government seeks to survive, so you would maintain the facade of normalcy for the benefit of your population while you use what time you have left to prepare, as quietly as possible, for the inescapable future.
What will matter in this future? Commodities, principally energy, food, and water. Everything else is secondary. Money is far down the list in importance.
So how would you, the government, prepare for a future world in which commodities are king? By securing today as many of those commodities as possible. Hence, the U.S. government’s binge of military base building throughout the commodity-rich regions of the world. What would you not worry about? Money. The only concern you might have for money is to prevent its premature demise. Hence, the smoke and mirrors used to paint a pretty but false portrait of the economy. Some will argue that the government needs more than just energy, food, and water to survive. True, but by controlling the bulk of the world’s key commodities, everything else can be procured, including human labor and loyalty.
In preparing for the future demise of civilization you would also seek to increase the government’s power as much and as rapidly as possible. Why? To maintain control over those increasingly precious resources, and equally important, to control people – especially your own people – by force, if necessary. Viewed in this light, the government’s aggressive pursuit of power during the last five years makes perfect sense. Ironically, President Bush got it right when he reportedly referred to the now totally eviscerated United States Constitution as a “god damned piece of paper.” That’s really all it is anymore.
So what fantasy world are Bush’s critics living in? The fantasy world in which civilization can continue as it has in the past. That we can continue to improve the standard of living of everyone in the world if we just return to a more sharing and egalitarian way of life, like that which we enjoyed between World War II and the mid 1970s. This is a fantasy. The Earth has finite limits. We are finally starting to grasp that fact with respect to oil. But oil depletion is merely the first in a series of coming crises ensuing from the finite confines of our planet. The fundamental problem – and I’m not a Malthusian – is that there are simply too many people for the Earth to sustain. This is why fish are disappearing from the oceans, why the supply of oil is unable to keep up with demand, why the globe is being deforested, why animal and plant species are going extinct, why water wars are in the offing. Perhaps if people were wiser and more willing to share, and implicitly, less greedy, we could sustain the more than six billion people on Earth, but, alas, such idealism does not describe human beings.
The one thing that has enabled the human population to grow to the immense dimensions we see today is oil, the resource facing the greatest challenge from depletion. As the oil supply diminishes, in the absence of herculean efforts to use oil more efficiently and fairly, large numbers of human beings will die off. Before then, soaring prices for oil will probably destroy the economies of the countries most dependent on the stuff, if not the entire intricately linked world economy. This is what I mean by the end of civilization. Of course life will go on. But it won’t be anything like what we’ve been accustomed to. Life will be more like that of the Middle Ages, in which a few wealthy lords controlled all the resources and possessed all the power, and the rest of the people – the lucky ones, anyway – were veritable slaves under these lords. In many ways that state of affairs exists today, but it’s unseen by all but the most observant individuals. The future I’m talking about, though, is considerably more spartan than what the worker bees enjoy today.
I believe that what we’re witnessing today is the inception of a titanic and protracted competition for survival: between countries, between civilizations, between governments and their people. Moreover, I believe the Bush administration is the first to recognize this competitive future, which explains its fundamentally different – seemingly feckless – behavior compared to past administrations. Bush’s favored courtiers, which include corporations, are profiting today and will become the new nobility in the coming New Middle Ages.
Truth and Distractions
The governments of the world, and the U.S. Government in particular, don’t want their people to know the truth. Governments usually end up seeing themselves as entities distinct from their people, and usually end up competing against them. That is true of almost every government on Earth today, and is especially true of the U.S. Government. Keeping the truth from people helps a government achieve its goals, for if the people knew the truth they might demand that the government start actually serving them.
One way to keep the truth from people, aside from today’s favored approach of simply suppressing it, is to feed them a steady diet of compelling distractions.
Elections are one such distraction. Elections arouse peoples’ passions and keep them entertained for weeks or months. Elections even give people the illusion of participation, when, in fact, elections mean absolutely nothing in a country like the United States, which is run by money. Of course, elections are run by, and legitimized by governments.
Sex is another good distraction, both sex scandals and sex-related social issues. Look at how much mileage the media got out of the Catholic Church sex abuse scandals. By comparison, sexual abuses by the government’s own schoolteachers outnumber those by the church, but we hear nary a word about them because they reflect negatively on the government, and the media cooperates in keeping this quiet. Sex between consenting adults, which ought to be nobody’s business except the participants’, also consumes our attention. Look at how much attention people pay to homosexuality. Why is that anybody else’s business? It’s not, obviously, but it’s a great distraction from important things, such as the government’s reverse-Robin Hood economic policies. The same with abortion. Abortion is a personal matter for the people involved. It’s none of society’s business. But government stokes the flames of debate about abortion and it consumes peoples’ attention. Sexually transmitted diseases – diseases in general – are also good distractions and have the added benefit of instilling fear in the population.
Crime is a perennial distraction. Even when the crime rate is falling, the government seems to hype the crime statistics, making it seem as if you’re putting your life at risk by merely setting foot outside your front door. Of course, “crime” breeds prisons, and prisons empower the government. Given the benefits of crime to the government, it comes as no surprise that the government creates crime by criminalizing harmless behavior such as using drugs or hiring a prostitute.
Religion is also a distraction. Domestically, the fashionable debate today revolves around the separation of church and state. There really ought not be any debate. The United States Constitution is unequivocal: the United States Government shall not recognize any particular religion. End of story. It does not say how states may address religion, but it does say that all powers not prohibited to the states belong to the states. In my opinion, then, if a state wants to recognize a religion, it may do so.
The “clash of civilizations” is perhaps the newest distraction, and a completely contrived one at that. The Muslim-Christian antipathy that exists today is both a religious and a cultural distraction. Decades ago, when we were affluent, we were taught to celebrate cultural diversity on our planet. Today that same diversity is touted as the explanation for the “clash of civilizations.” Granted, different cultures are, well, different. But that doesn’t mean that conflict must ensue, and for decades there was no conflict. Clearly, the flames of cultural conflict are being stoked. By whom? The governments of the world and the media. For example, just look at how European media companies and European governments colluded recently to provoke Muslims with those silly cartoons. Cultural conflict not only distracts the masses, but it provides governments with a credible justification to increase their power, for instance, to regulate headgear worn in schools and restrict immigration. Of course, “terrorism” is ancillary to this clash of civilizations and serves to intensify anxiety in the population. How many acts of terrorism are actually perpetrated by governments? It’s impossible to say, but it’s definitely more than zero, a lot more. So why does a government perpetrate an act of terrorism? To create a distraction, to increase its power, or both.
One thing all of these distractions have in common is collusion – intentional or incidental – between the government and the media. The government seems to be involved in all of these distractions to varying degrees, ranging from merely exaggerating the importance of some distractions to actively orchestrating others. And none of these distractions could successfully distract the public without the zealous participation of, and amplification by, the media. One might argue that the media is naturally drawn to report sensational news, as a moth is drawn to light, and most of these distractions qualify as sensational. But I don’t think it’s purely coincidental that the media relishes these stories when there is so much overlap between the agendas of the government and the corporations that comprise the “media.”
Both entities seek to dominate, exploit, and control the “little people.” And the little people, being xenophobic, uneducated, and fearful, are easily manipulated in a formulaic manner to help undermine their own welfare. Simply look at their support for Bush, a leader who has systematically attacked their standard of living, not to mention their liberties. All Bush had to do was push a few buttons labeled “religion,” “sex,” and “culture” to get them to react like Pavlovian dogs. And all this button pushing was, of course, happily assisted by the media.
Resource Competition
We humans like to think of ourselves as so much more sophisticated than “lower” animals. In affluent times and places we can afford to worry about silly things like what movies will win Oscar awards, whether our body looks good at the gym, or where we will take our next family vacation.
But our existence still depends on this fundamental equation: survival = food + water + shelter.
In leaner times, like those we’re heading into, the above equation becomes sharply apparent.
Food production today is highly dependent on oil. Oil powers our farm implements, oil and natural gas are ingredients in commercial pesticides and fertilizers, and oil transports food to market. Today food travels as far as 10,000 miles from where it’s produced to where it’s consumed, which would be impossible without oil. Oil vastly increases agricultural productivity. So it’s because of our largess of oil that the human population has been able to grow as large as it has. One might say that humans eat oil. We can, of course, produce food without oil – barring such evil manifestations as crops that are genetically engineered to require the use of petroleum-based pesticides – but without oil food production will be much lower.
Water is a resource we take for granted. We act as though there is no limit to the supplies of water, and that there are no repercussions to our profligate consumption of it. We’re building cities in places without adequate water supplies – Phoenix and Las Vegas come to mind – and we’re using up vast reservoirs of non-replenishable “fossil” water, such as the Ogallala Aquifer in the American Midwest. Just as we’re failing to plan for economic “rainy days,” we’re failing to regulate our water usage to prepare for a literal lack of rainy days. We seem to think that the replenishable water supply patterns will remain unchanged, an especially optimistic expectation if the Earth’s climate is truly in the midst of major change. But the water situation is even worse in some other places than in America. Water delivery is partly dependent on energy, just as food production is. It takes energy to pump water from the ground, to transport it to where it’s consumed, and even to treat it. Of course, food production is vitally dependent on water.
I hardly need mention the importance of oil except to say that for the first time in history, the demand curve is passing the supply curve. Moreover, the supply curve will soon be heading downward and we’ll find ourselves perpetually chasing this ever dwindling supply downhill. When demand merely exceeds supply the price of oil will increase. But when demand exceeds supply and the supply starts to diminish, then prices will really go up, enough to destroy economies or render impractical the transportation of food and water to some places. But the gap between supply and demand means more than just higher prices. It also means shortages. Those who can afford to buy oil will usually have their needs satisfied, albeit at higher cost. But those who cannot pay the price will do without. Occasionally, even those who can afford to buy oil will be forced to do without because from time to time there simply won’t be any oil to buy on the global market, at any price. Imagine going to your local gas station and seeing a sign out front reading “Sorry, no gas.” Imagine going to your local grocery store and seeing empty shelves because the trucks that deliver goods to the store had no diesel fuel. Imagine having to bundle up in two layers of sweaters inside your house because you have to make half your normal allotment of home heating oil last the entire winter. These hypothetical scenarios will become reality and will occur with increasing frequency as time goes on.
What’s going to happen when people have to vigorously compete for food, water, and energy in order to survive? I think it’s going to get vicious. My opinion of humanity holds that in the face of such adversity, it will be every man for himself. Countries will compete against countries. States will compete against states. Cities will compete against cities. Governments will even compete against their citizens. Civilization, in the sense of the word “civility,” will be no more. Perhaps genetically engineered terminator seeds, depleted uranium, and exotic diseases are secretly intended to reduce the human population to alleviate resource competition.
Clearly, the U.S. invasion of Iraq is one of the opening salvos in the coming resource wars. And the U.S.’s belligerence toward Iran is undoubtedly due to Iran’s possession of vast oil and natural gas resources. Bear in mind that a country need not seek control of vital resources with the intention of consuming them. The country that controls resources can use those resources either as a lever to compel other countries to behave a certain way, or to buy other resources or finished goods, such as weapons and integrated circuit chips.
The End of Money
The 1970s was the apotheosis of the “American Dream.” Wedged between the preceding decade of civil unrest and the subsequent decade of recessions, rapidly rising homelessness, and mass layoffs, the 1970s was a comparatively idyllic decade. It certainly had its problems – stagflation, for instance – but even while living during that time I felt it was a special decade. Life was good; people were happy, friendly, and mellow; TV shows and movies were cheerful; civil liberties were at their peak; government power was at its lowest ebb; the country was affluent and at its peak of industrial prowess. It’s not a coincidence that the tallest buildings in America were built during the 1970s. Those buildings were icons of American industry and power. Although the Vietnam War raged during the first half of the 1970s, it was in the process of winding down and came to an end by the middle of that decade. The cessation of the Vietnam War was as much a reflection of the peoples’ desire to “live and let live” as it was a military defeat. Military conscription also ended in that decade, and even the cold war cooled off because of détente.
Unfortunately, what we didn’t realize at the time was that we would never again have it so good. The 1970s represented a “tipping point,” to use the popular vernacular, for the American Dream. That was when globalization really started to take off and when the serious decline of American industry began, the steel and auto industries being among the first casualties. Interestingly, the 1970s was also the decade of peak oil production in the United States, after which point we became increasingly reliant on imported oil, which greased our downward slide. What I didn’t realize until writing this was how crucial a role President Nixon played in creating this tipping point. Nixon opened the door to trade with China, a major player in today’s globalized economy. Nixon disassociated the U.S. dollar from gold, facilitating the destruction of wealth through unrelenting devaluation of the dollar. Nixon launched the war on drugs, a precursor to today’s war on terror (or is it the war of terror, I can’t tell?). Both the drug war and war on/of terror consume wealth in order to serve the imperial ambitions of the U.S. Government, but contribute nothing to the country’s production of wealth.
The 1980s was a decade in which previously accumulated wealth was systematically extracted, mainly through the mechanism of “Merger Mania.” The 1980s was a decade of marked industrial and economic decline, which was masked to a large extent by releasing into the economy some of the wealth squeezed out of these mergers, as well as by the massive accumulation of debt. The transformations of the 1980s also introduced a new component: the injection of foreign wealth into the country. Many of the assets sold in the 1980s were purchased by foreigners, especially the Japanese, a trend which accelerated toward the latter half of the decade, highlighting America’s economic decline. The 1980s also marked the inception of the mythical “service economy” theory to justify the profitable exporting of American jobs. The economy is like a pyramid. Forming the foundation of this pyramid is the one true source of wealth: natural resources – the free wealth given to us by the Earth and the Sun. Mining for minerals and energy, agriculture, fishing, and forestry are the source of all other wealth. Above this foundation are industries that utilize its products. These second level industries consist primarily of manufacturers that take raw materials and produce something of greater value. Above the manufacturers are companies that serve them, including law firms, advertising agencies, shipping companies, airlines, hotels, restaurants, and even entertainment. As wealth moves up this pyramid a little wealth, constituting salaries and savings, is retained by each level in the pyramid. The myth of the service economy, the darling theory of the 1980s, is that a country could retain the top of the pyramid and outsource the base of it. During the last three decades we have transfered much of the base of this economic pyramid to countries such as China and India and indeed, initially, the money kept flowing to the top of the pyramid which remained in the United States. But after a while, a new top of the pyramid began to form in those countries where we had shipped the base of the pyramid. Witness today not only the exodus of high tech jobs to China and India, but that in those countries pure service companies, such as advertising agencies, are also starting to flourish.
The 1990s was a period of greatly accelerating globalization and economic decline for the United States, aided and abetted by such treaties as NAFTA, GATT, and the WTO. Again, this massive decline was masked by the illusion of wealth that persisted during the huge stock market bubble of the latter half of the 1990s. Like merger mania before it, the stock market bubble attracted a lot of foreign wealth. A bit more previously accumulated wealth was extracted from rising human productivity here in the United States during the 1990s.
Finally, the 2000s so far represent an era massively dependent on inflows of foreign wealth. With our previously accumulated wealth now exhausted and little means left for fundamental wealth production, about the only thing keeping the U.S. economy afloat these days is consumer spending and deficit spending by the government, both of which are financed by growing mountains of debt, which is owed to foreigners. The United States has largely been reduced to a nation of people that sell each other hamburgers, with foreigners paying the checks. Asset sales to foreigners continue as well, the failed Chinese bid for Unocal and the not-so-failed Dubai bid to run some of our seaports being prominent recent examples.
During the last thirty years in America two persistent trends are clear: the steady depletion of existing wealth and decline in the means to produce new wealth; and the steady rise of an imperial U.S. Government.
Today, the economic imbalances in the United States economy are so vast that I cannot see how they can be corrected gracefully. Even more astonishing to me is that people keep buying financial instruments like U.S. Treasury bills. Do these investors really believe they’re ever going to get their money back? The national debt is so large that paying it down is nearly impossible, especially since there is no political will to either increase taxes or reduce spending. Obviously, the U.S. Government knows it cannot pay down the national debt, which is why it covertly relies on dollar devaluation to reduce the value of the national debt.
It’s only a matter of time before the majority of investors in dollar-denominated financial instruments open their eyes and stop buying those assets. When that happens the dollar is doomed. The government’s only recourse when it cannot borrow money will be to print dollars, which will only accelerate the dollar’s demise, possibly even inducing hyperinflation along the way.
If oil prices skyrocket because of the global supply and demand relationship and harm the U.S. economy, that could accelerate the dollar’s demise as well. I personally don’t see how the dollar can avoid substantial devaluation, either slowly or rapidly. I hope the decline is gradual.
All of the world’s government-issued currencies are in similar straits. None are firmly backed by finite, physical resources, such as gold. Consequently, all currencies have the potential to suffer from devaluation, even more so since the economies of the world’s countries are so intricately linked together. If one currency abruptly collapses, especially an important one like the dollar, they could all come crashing down.
Additionally, faith in the world’s currencies depends in part on globalization. The willingness of an investor in Japan to buy American dollars depends in part on the investor’s expectation of a continuing economic relationship between Japan and America. But in an era where global trade is increasingly challenged by oil shortages, faith in other countries’ currencies will diminish too. Countries will increasingly prefer to conduct international trade using universal mediums like gold instead of currency.
If currencies such as the dollar become worthless, even local trade may be conducted using gold or other precious metals. Such trade may, in fact, have to be conducted in black markets, since financially distressed governments will probably seek to confiscate all gold and precious metals from their citizens.
The bottom line is that government-issued currency will be a thing of the past. So how will the government continue to exist?
Acquisition of Resources
Without money or credit, government can only continue to exist through force. The United States government is particularly well endowed in this regard and has demonstrated its willingness to use force to acquire resources, and not as a last resort either.
Iraq’s oil is the first such resource to be acquired by military force. Iran’s oil and natural gas may well be the next. In the long run, the energy-rich regions of central Asia will also attract the hungry gaze of the U.S. Empire. Of course, other powerful, populous, and hungry countries, such as China and India, will also have designs on these energy-rich regions, which will probably result in significant wars. Oil from the Middle East will probably become so valuable that countries will have to provide a military escort for every tanker carrying oil across the ocean.
Domestically, energy will be controlled by the government. It will satisfy its needs first, corporations will have their needs satisfied second, and the populace will be forced to ration whatever is left.
Food is also critical to the government, comprised, as it is, of people. So it’s logical to assume that the government will at some point take control of food production. As with energy, the government will satisfy its own food requirements first, and the populace will be left to ration whatever is left.
If water becomes a scarce or unreliable resource, then we can assume that the government will take control of that as well.
In a future where money has no value, the only way a government can retain people is by providing them with food, water, and shelter. In fact, in a future world where resource competition is the order of the day, people will probably covet a government job – as a bureaucrat, a laborer, or a soldier – simply because it will mean three square meals a day and a roof over their head.
Of course, government needs more than just food, water, and shelter. Government needs weapons, vehicles, computers, communications gear, and myriad other manufactured items. Some of these things are manufactured wholly in other countries, or depend in part on components from other countries. Without money the government cannot buy these things. But it can trade precious resources, such as oil, water, and food, for them. Some critical factories, such as domestic weapons plants, may be taken over wholesale by the government for security reasons.
Slave Labor
Government cannot operate on resources and material alone. It also needs labor. Some of that labor can be “purchased” in exchange for resources. But in order for the government to operate “profitably” it will have to employ slave labor, that is, labor it doesn’t have to pay so richly for.
We already have such a precedent. Many of the two million people already incarcerated in this country are veritable slave laborers. They “earn” anywhere from twenty-five cents to one dollar per hour, often working for major American corporations. But in some cases these poor prisoners are then charged room and board for being in prison, thus wiping out their minuscule income. In effect, since they are being forced to work without making any net income, they are slaves. It does not challenge the imagination to envision future slave laborers working in factories manufacturing everything from machine guns to computers, or working on farms to produce food, returning each night to sleep in their prison cells.
The United States military is currently exploring ways to utilize civilian prisoners to satisfy the military’s labor needs. It’s only a matter of time before they come up with a justification for doing so.
Once the framework for utilizing slave laborers – all nice and legal, of course – is established, it’s quite easy to increase the pool of potential laborers, if necessary. The government merely has to criminalize more behaviors. Caught driving your car on the “wrong” day? Three months in prison loading ammunition cartridges. Caught possessing gold coins? Six months in prison assembling computers. Caught saying “subversive” things over the telephone to your aunt? Five years on a prison farm – for the both of you – tending crops. Of course, prison sentences will likely be accompanied by asset forfeiture, that is, if you have anything the government wants. There is already a precedent today for asset forfeiture too, even for minor offenses such as hiring a prostitute or having a marijuana cigarette in your car. Heck, simply walking through an airport today with “too much” cash on your person might result in it being confiscated.
Conclusion
Although this essay has mainly been a description of the United States and its future, much of it is applicable to the world as a whole. Some other countries may well face worse times ahead because they lack the natural resources and/or military might that the United States possesses.
The goal of this essay is not to propose solutions to the many problems facing us, although there are solutions, but to explain the seemingly irrational behavior we see around the world. Viewing the world today in light of the foregoing essay, Bush’s actions are understandable, even though I don’t endorse them: the competitive pursuit of resources, the rolling back of civil liberties, the carefree handling of the economy.
Copyright 2006 by Dave Eriqat
Thursday, March 02, 2006
US report acknowledges peak-oil threat
By Adam Porter in Perpignan, France
Wednesday 09 March 2005, 18:23 Makka Time, 15:23 GMT
Some say global oil production has passed its peak point
It has long been denied that the US government bases any policy around the idea that global oil production may be in terminal decline.
But a new US government-sponsored report, obtained by Aljazeera.net, does exactly that.
Authored by Robert Hirsch, Roger Bezdek and Robert Wendling and titled The Peaking of World Oil production: Impacts, Mitigation, & Risk Management, the report is an assessment requested by the US Department of Energy (DoE), National Energy Technology Laboratory.
It was prepared by Hirsch, who is a senior energy programme adviser at the private scientific and military company, Science Applications International Corporation (SAIC).
They work extensively on defence and geopolitical issues for clients, including many for the US government.
Advisory roles
Among current job openings at SAIC are positions at Fort Benning (formerly School of the Americas) and a private military contract to help retrain the Albanian air force in Tirana.
Hirsch has held a wide variety of positions in the US energy hierarchy including senior energy analyst at the Rand Corporation, through to a presidentially appointed assistant administrator for solar, geothermal and advanced energy systems.
Attacks on Iraq's oil network are
doing nothing to calm the market
He has also previously worked for the US Department of Energy on numerous advisory committees, including the DoE Energy Research Advisory Board.
This new report follows on from two presentations by Hirsch last year. One on 1 March to the same National Energy Technology Laboratory and another on 14 June last year at the Annapolis Centre for Science Based Public Policy. Here Hirsch laid down his ideas on the peak of oil production.
The Annapolis Centre for Science-based Public Policy is a group which has received $658,000 in funding from Exxon Mobil since 1998. It openly disputes the idea that global warming is the result of burning fossil fuels.
But this brand new senior-level report on "peak oil" is unprecedented in US government circles. It is not just the existence of the report itself that is such a landmark in the current oil debate. Its conclusions also pull no punches.
Uncertain timing
"World oil peaking is going to happen," the report says. Only the "timing is uncertain".
The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts ... the economic loss to the United States could be measured on a trillion-dollar scale," the report says.
A US expert panel says markets
cannot solve peak-oil problems
The authors of the report also dismiss the power of the markets to solve any oil peak. They call for the intervention of governments. But also they rather worryingly point to a need to exclude public debate and environmental concerns from the process. They say this is needed to speed up decision-making.
"Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. But the process will not be easy. Expediency may require major changes to ... lengthy environmental reviews and lengthy public involvement."
Hirsch notes, despite arguments from the major oil companies and producer nations, that new finds of oil are not replacing oil consumed each year. Despite the advances in technology, reserves are becoming increasingly difficult to replace.
Three scenarios
The report sees "a world moving from a long period in which reserves additions were much greater than consumption, to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production".
Critics say Bush has failed to act
to reduce US dependence on oil
The report then takes three possible scenarios and outcomes. Firstly that energy replacement solutions, or "mitigation" as the report states, are started 20 years before any "peak". Secondly that solutions are only enacted 10 years before any peak and, thirdly, that solutions are only put into practice as the peak becomes apparent.
In what some may see as an optimistic assessment, the authors believe 20 years is enough time to limit damage from any peak. However, they point out that "if mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction".
Demand destruction is a modern way of saying catastrophic recessions and shortages. But as well as these predictions, the report lays out "signals" it believes will be apparent in the run-up to any peak. This is perhaps the most worrying aspect of the report, as it seems to describe the very events that are taking place at the moment.
Supply insecurity
"As world oil peaking is approached, excess production capacity ... will disappear, so that even minor supply disruptions will cause increased price volatility as traders, speculators, and other market participants react to supply/demand events," the report says.
One scenario says energy prices
may become more unpredictable
"Simultaneously, oil storage inventories are likely to decrease, further eroding security of supply, aggravating price volatility, and further stimulating speculation ... oil could become the price setter in the broader energy market, in which case other energy prices could well become increasingly volatile and unpredictable."
The report highlights a series of ways to minimise any impacts. From increased fuel efficiency to technological help in stopping the practice of "oil-left-behind" or non-extractable oil and various forms of new liquid fuels, liquefied coal and gas-to-liquids.
But in its conclusion the report makes troubling reading, noting that "the world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary."
This report is the clearest signal yet that the U.S government is taking the subject of "peak oil" seriously. Yet it remains to be seen what actions can be taken to stop this potentially "revolutionary" change.
Aljazeera
By Adam Porter in Perpignan, France
Wednesday 09 March 2005, 18:23 Makka Time, 15:23 GMT
Some say global oil production has passed its peak point
It has long been denied that the US government bases any policy around the idea that global oil production may be in terminal decline.
But a new US government-sponsored report, obtained by Aljazeera.net, does exactly that.
Authored by Robert Hirsch, Roger Bezdek and Robert Wendling and titled The Peaking of World Oil production: Impacts, Mitigation, & Risk Management, the report is an assessment requested by the US Department of Energy (DoE), National Energy Technology Laboratory.
It was prepared by Hirsch, who is a senior energy programme adviser at the private scientific and military company, Science Applications International Corporation (SAIC).
They work extensively on defence and geopolitical issues for clients, including many for the US government.
Advisory roles
Among current job openings at SAIC are positions at Fort Benning (formerly School of the Americas) and a private military contract to help retrain the Albanian air force in Tirana.
Hirsch has held a wide variety of positions in the US energy hierarchy including senior energy analyst at the Rand Corporation, through to a presidentially appointed assistant administrator for solar, geothermal and advanced energy systems.
Attacks on Iraq's oil network are
doing nothing to calm the market
He has also previously worked for the US Department of Energy on numerous advisory committees, including the DoE Energy Research Advisory Board.
This new report follows on from two presentations by Hirsch last year. One on 1 March to the same National Energy Technology Laboratory and another on 14 June last year at the Annapolis Centre for Science Based Public Policy. Here Hirsch laid down his ideas on the peak of oil production.
The Annapolis Centre for Science-based Public Policy is a group which has received $658,000 in funding from Exxon Mobil since 1998. It openly disputes the idea that global warming is the result of burning fossil fuels.
But this brand new senior-level report on "peak oil" is unprecedented in US government circles. It is not just the existence of the report itself that is such a landmark in the current oil debate. Its conclusions also pull no punches.
Uncertain timing
"World oil peaking is going to happen," the report says. Only the "timing is uncertain".
The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts ... the economic loss to the United States could be measured on a trillion-dollar scale," the report says.
A US expert panel says markets
cannot solve peak-oil problems
The authors of the report also dismiss the power of the markets to solve any oil peak. They call for the intervention of governments. But also they rather worryingly point to a need to exclude public debate and environmental concerns from the process. They say this is needed to speed up decision-making.
"Intervention by governments will be required, because the economic and social implications of oil peaking would otherwise be chaotic. But the process will not be easy. Expediency may require major changes to ... lengthy environmental reviews and lengthy public involvement."
Hirsch notes, despite arguments from the major oil companies and producer nations, that new finds of oil are not replacing oil consumed each year. Despite the advances in technology, reserves are becoming increasingly difficult to replace.
Three scenarios
The report sees "a world moving from a long period in which reserves additions were much greater than consumption, to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production".
Critics say Bush has failed to act
to reduce US dependence on oil
The report then takes three possible scenarios and outcomes. Firstly that energy replacement solutions, or "mitigation" as the report states, are started 20 years before any "peak". Secondly that solutions are only enacted 10 years before any peak and, thirdly, that solutions are only put into practice as the peak becomes apparent.
In what some may see as an optimistic assessment, the authors believe 20 years is enough time to limit damage from any peak. However, they point out that "if mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction".
Demand destruction is a modern way of saying catastrophic recessions and shortages. But as well as these predictions, the report lays out "signals" it believes will be apparent in the run-up to any peak. This is perhaps the most worrying aspect of the report, as it seems to describe the very events that are taking place at the moment.
Supply insecurity
"As world oil peaking is approached, excess production capacity ... will disappear, so that even minor supply disruptions will cause increased price volatility as traders, speculators, and other market participants react to supply/demand events," the report says.
One scenario says energy prices
may become more unpredictable
"Simultaneously, oil storage inventories are likely to decrease, further eroding security of supply, aggravating price volatility, and further stimulating speculation ... oil could become the price setter in the broader energy market, in which case other energy prices could well become increasingly volatile and unpredictable."
The report highlights a series of ways to minimise any impacts. From increased fuel efficiency to technological help in stopping the practice of "oil-left-behind" or non-extractable oil and various forms of new liquid fuels, liquefied coal and gas-to-liquids.
But in its conclusion the report makes troubling reading, noting that "the world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions were gradual and evolutionary. Oil peaking will be abrupt and revolutionary."
This report is the clearest signal yet that the U.S government is taking the subject of "peak oil" seriously. Yet it remains to be seen what actions can be taken to stop this potentially "revolutionary" change.
Aljazeera
The Fire Is No Longer On Its Way - It Has Begun
Wednesday, 23 March 2005, 12:55 pm
Opinion: From The Wilderness Publications
GlobalCorp.
I AM NOT A POLITICIAN
THE FIRE IS NO LONGER ON ITS WAY
IT HAS BEGUN
An Important Announcement
by
Michael C. Ruppert
© Copyright 2005, From The Wilderness Publications, www.fromthewilderness.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.
Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it. - Mark Twain
(special thanks to Bill Tamblyn for finding this quote.)March 10, 2005, PST 0900 (FTW) -- I am not a politician. I will never be a politician.
With this article both I and the FTW family will never again think in terms of whom we might offend or what bridges we need to build, burn or fireproof. As Don Henley wrote in a song of profound spiritual gratitude, "Sometimes you get your best light from a burning bridge." I'm going to burn a few with this essay.
Peak Oil is no longer on the way. It is here. Forget for a moment whether or not global oil production has actually begun (see below) its hopelessly irreversible decline. We will not know that for certain until sometime after it happens. The political fact, however, is that global inertia in response to Peak has driven our species, all of it, past the point of no return. There is no changing course for us. We have committed to a path of bloody destruction that can no longer be postponed or evaded. Energy investment banker Matthew Simmons - long a smoke alarm for Peak Oil - has said repeatedly, "The problem is that the world has no Plan B." Simmons is right.
Seeing clearly that there is no Plan B, it is now also too late to come up with a Plan C or Plan D. What I had hoped to accomplish with Crossing the Rubicon is now a missed opportunity. Yet the map so many of us drew in Rubicon remains astonishingly accurate and unaltered. It may prove to be an indispensable survival tool in and of itself very shortly.
ADVERTISEMENT
Politicians come in varieties. They are in business. They are sometimes activists. Many pose as journalists. Some are economists and academics. They work in think tanks and manage the editorial decisions of major press outlets. Many average citizens behave and think like politicians because they accept as their primary mantras: "Don't rock the boat," and "Don't offend anyone." Politicians are more deadly than any weapon. They see their primary mission as building consensus to improve outward appearances.
For a politician the questions are always: "How can I superficially address an immediate problem without going to its root causes? What is the least amount of work I have to do to make this go away while I'm on duty? How can I deal with this problem without burning bridges?" Lately, economists, business and religious leaders, and everyday people have been behaving more like politicians than politicians themselves. Much like the incestuous, sealed-off, fetid Bush administration, the politicians are going to other politicians to make policy - when they dare even to do that. Refusing to make policy is also a policy.
In fact, most people have become politicians and it may well be that political correctness (including the fear of speaking out) - to whatever degree it is observed - will be the sword on which we now (not tomorrow) impale ourselves.
Bridges are burning all around us; bridges to responses that might have mitigated the already brutal (and just beginning) ravages of Peak Oil; bridges to reduce the likelihood of war and famine; bridges to avoid our selectively chosen suicide; bridges to change at least a part of energy infrastructure and consumption; bridges to becoming something better than we are or have been; bridges to nonviolence. Those bridges are effectively gone.
Stan Goff was right when he warned activists that "the gun," in all its forms, would be brought out before this was over. It was inevitable. False flag terror attacks, a fake war on terrorism, routine political murders, stolen elections, and Republican traffic in pedophilia remain causes for outrage and defiance, but they can no longer be useful avenues to justice: the legal system is broken. It's broken for reasons far greater than what used to be called corruption. And it cannot be fixed when a world war and unprecedented economic and ecological collapse are smashing down every wall between humanity and the unthinkable.
Politicians are creatures of economics. Their success has always been measured first and only by what economic benefits they returned to constituents or themselves. The victim has been the future. We have all told the politicians what we really want them to do for us while speaking platitudes from the other side of our mouths. As I have said for so many years, we are all prisoners of the way money works. Until we change that, any solution is only temporal and illusory. No electoral change is possible now that elections all over the world have sworn their allegiance to privately owned software programs and obvious manipulation.
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FOR THOSE WHO CAN READ THE MAP
As the evidence grows stronger that we are at Peak now (or very close to it), there is a distinct correlation between oil price hikes and military budget increases, weapons deployment, warfare and covert operations around the world. Economists don't consider such things so they don't report on them. Their orthodoxy scorns any integrated view of world developments outside their own discipline.
For long-time readers of FTW I need do little more than discuss a few recent developments to put this in perspective. For the rest I will provide you with some of a great many available dots you can connect if you care to. Most people find themselves unable to tolerate the sight of the pattern which the connected dots reveal. After this, FTW will no longer try to detail the dots of Peak Oil. What we have published over the last seven years is proof enough. We had it right. I refuse to go over it again. Those who get it now, get it. Those who do not may possibly be beyond saving, because their own choices have deprived them of critical months of preparation for the crisis - especially since most of this "preparation" is psychological in nature. It is very hard and very painful to get one's mind to accept this reality.
Nature does not grant time outs.
THE CIA
I recently had a conversation with someone who spent 17 years in the CIA's Directorate of Operations. Thinking of the purge and power shift that has - over the course of the last nine months - decimated the Central Intelligence Agency (long my Bête Noir) and shifted much of its power to the Pentagon, I asked the following question.
"Look, the agency does many things in many roles from raw intelligence gathering, to economic warfare, to satellite recon, to paramilitary operations requiring cover and deniability, to drug smuggling. But since its inception it was always focused in large part on medium and long-term intelligence gathering and covert operations through the costly, patient, expensive means of placing NOCs (non-official covers) or assets in missions where it might take five, ten or fifteen years to bear fruit. These programs were always centered on "what if" contingencies which inherently implied that multiple outcomes were possible; that there were alternative futures to be influenced and shaped.
"Battlefield intelligence is a different critter. It presupposes that there is nothing more important than the battle that has been joined at this moment. If the battle is not won, there are no future choices. Hence nothing matters other than the war that is being fought today. No Yaltas or Potsdams; no future deep cover moles will be needed.
"Every country in the world is betting everything it has on this one hand knowing that after 2007 or 2008 the game ends. The map of the future after that is unknowable and, to large extent, irrelevant. That's why Rumsfeld has won the battle to control American intelligence operations and why the new National Intelligence Director John Negroponte is getting the job.
"Is that right?"
Without the slightest hesitation the former CIA employee answered, "Yes."
It is the ultimate testimony to the madness of Donald Rumsfeld, Paul Wolfowitz and Dick Cheney that there are no more tomorrows left to fix anything. Since 9/11, and especially since a second presidential election was stolen four months ago, the setting for a real Armageddon has been locked in place. It may well have been for years before that.
GASOLINE PRICES
A recent USA TODAY story, giving us the new word "Petronoia," warned that gasoline prices could jump by 25 cents per gallon within the next few days. That increase, it said, would take $90 million per day out of a consumer economy that relies on profligate spending to sustain already bursting bubbles. How are we getting the money to sustain these bubbles? We are, according to Bill Fleckenstein of MSN, using our houses as ATMs just to keep up, even as the housing bubble has already begun to burst.[1] Our paychecks certainly aren't increasing.
OIL PRICES
Oil has topped $54 a barrel. It's gone up more than 25% in less than three months and fifty per cent over the last year; 400% since 1999. This amid strong signs that global oil production may have already peaked, as declines around the world are not being offset by new production. New fields may come online but the respite will be very short-lived. There may be a few "mega" projects (about a six-day supply for the planet in each) which may produce momentary price declines but the trend is irreversible. Official bodies like the International Energy Administration (IEA) are openly wishing that demand growth might slow in 2005, when actual figures already prove this wish utterly fanciful. China's oil demand is expected to grow by 33% this year. Industrialized and developing nations are expanding their economies as fast as possible to generate cash and liquidity as a means of securing more oil.
The vicious cycle is in full swing. And yet, according to economist Andrew McKillop…
We then move on to actual declines in production. For the majority of non-OPEC producers - (in fact nearly all except Russia and some Central Asian producers) rates of decline are stubbornly high, despite vaunted technology improvements…
One of the biggest problems facing the IEA [a UN sponsored agency], the EIA [a US government agency] and a host of analysts and 'experts' who claim that 'high prices cut demand', either directly or through damping oil economic growth, is that this does not happen in the real world. Since early 1999 oil prices have risen about 400%. Oil demand growth in 2004 at nearly 4% was the highest in 25 years. In each year since 1999 world oil demand growth has been higher than the previous year - as prices rise.[2]
McKillop's analysis, which essentially says that rising oil prices are either good or of no consequence, falls way short for two reasons. Energy investment banker Matt Simmons a year ago in Berlin stated that he saw the actual point at which price would curb demand at around $180 per barrel. The consumers are bearing most of the costs of these increases. Is this the consumers' choice, or is it simply the point beyond which "the American way of life" will become impossible, regardless of how many incremental cuts people accept?
Go ahead; try to choose to use less oil of your own volition. What reductions are available to you are minimal because the world in which you must make your house payments, feed your family, drive to work and pay your bills is leaving you little choice but to consume more and get less for your money. Only at around $180 a barrel will the consumer no longer be able to subsidize the corporate and economic superstructure on his/her shoulders. This is essentially what Simmons was saying.
The poor will be the first to suffer and they will suffer the most. They will be the first to die.
Secondly, McKillop assumes a "trickle down" benefit to consumers from high prices. International capital flows and your own checkbook should be enough to dispel this belief. Need I say more? Didn't we hear enough about trickle-down from Ronald Reagan?
PRODUCTION
Oil industry guru Jan Lundberg - who seems to be getting a lot less air time than he used to - recently wrote the following brilliant assessment for (ironically of all places) Electric Vehicle (EV) Magazine. Lundberg got it right.
The end of abundant, affordable oil is in sight, and the implications are colossal. About now in our hydrocarbon phase of human history, we have pulled out of the Earth approximately half of the available petroleum (crude oil and natural gas). The other half still in the ground is harder to extract and may not - as assumed - fuel the global economy or even provide a transition to another phase…
This means that the next tough oil shortage, even if it is not acknowledged as a post-peak oil extraction phenomenon of diminishing supply, will cripple the globalized economy. Understanding of both the economics and social dynamics of collapse is rare, and even when it is present there is an absence of taking into account the "market factor" in ushering in collapse…
Despite the need to be prepared for imminent, final energy shortage - which could happen now or in several years at the latest - people persist in focusing too much on the likely date of the passing of the peak. It is already clear that the oil industry and OPEC numbers on oil reserves are suspect.
The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies. There may be an event that appears to trigger this final energy crash, but the overall cause will be the huge consumption on a finite planet.
The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno-toys and whatnot from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. The damage that several days' oil shortage and outage will do will soon wreak permanent damage that starts with companies and consumers not paying their bills and not going to work.
After an almost instant depression seizes the modern industrialized world, and nation-states break down, the frantic attempts of people to feed themselves, stay warm and obtain fresh water (pumped presently via petroleum to a great extent), there will be no rescue. Die-off begins. The least petroleum-dependent communities will survive best. These "backward" nations will be emulated by the scrounging survivors of the U.S. and the rest of the "developed" world, as far as local food production will be tried - in a paved-over, toxic landscape by people who have lost touch with the land...
The prospects of mitigating peak oil or avoiding collapse are almost nil. U.S. petroleum demand in 2004 grew at its strongest rate in five years. In December the daily consumption of refined oil was 21 million barrels in the U.S, a quarter of world use. The U.S. leads the industrialized world in population growth, part of a domestic policy to assure more car and oil sales…
… The Earth cannot, as of the world oil peak in extraction, give up ever greater quantities of black gold. Most of the world exporting companies are now reducing extraction rates due to fewer discoveries and depleted fields. Oil production in 18 producer countries has passed its peak and is declining faster than previously thought: at about 1.14 million barrels a day.
"International Energy Agency figures put the total spare capacity of all 11 countries in OPEC at just 330,000 bpd (down from 6 million bpd in 2002). Conventional Saudi spare capacity is zero... An IEA report from August 2004 indicates Saudi Arabia needs up to 800,000 bpd of newly discovered oil each year just to offset declining fields and maintain its current production level." [Al-jazeera] - This can't happen, so watch for the ensuing energy crisis.
The world needs to produce another 2,723,530.2 barrels per day by the end of 2005 just in order to stand still…
Petroleum is the Great Leveler, in the sense of "leveling" or flattening oil civilization. But petroleum will also be the Great Leveler in terms of equalizing everyone: People will go through a final, grasping petroleum grab with whatever funds and connections they have, before the attempt fails for good. Then all people will have no choice but to work together or perish. Until then, we have skewed values: for example, when a kindly old lady drives to a shop and has her charitable concerns, the use of oil makes her a killer of the planet and she is not pursuing a sustainable form of transportation. Meanwhile, a mean old man who scowls at little children who walks to the shop might be a much more valuable citizen in a practical fashion that matters to the world.[3]
THE MOST EVIL STATEMENT I HAVE EVER HEARD
Detroit News columnist Thomas Bray recently described an interview with two "experts"; authors who come from the corporate/industrial/Neocon camp. The aberration of his thinking is symptomatic of the guilt we all share and the consequences we all seem to be begging for.
"We will never stop craving more," say Huber and Mills, "nor should we ever wish to. Energy is what brings light out of dark, civilization out of disorder, prosperity out of poverty."[4] What was the title of the book that Bray was so jazzed about? The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy.
Contrast all of the above with the following February 28 quotation from China's Xinhuanet news agency:
Global demand may average 84 million barrels a day in 2005, while daily production in January was only 83.6 million barrels, according to the International Energy Agency. Oil prices have risen 11 per cent in the past three weeks in New York on growing concern that OPEC and other exporters will fail to keep up with demand this year.[5] That all of these factors are forming a perfect storm is now clear.
Marshall Auerback, a brilliant economist (www.prudentbear.com) who dares to see the world whole, notes:
"At the time of the 1929 stock market crash, total US credit was 176 percent of Gross Domestic Product. In 1933 with GDP imploding and the real value of debt rising even faster, total credit rose to 287 percent of what was left of GDP…In 2000 at the top of the late bull market, total credit was 269 of GDP. An extraordinary statistic to be sure but dwarfed by today's figure, in which total credit stands at a whopping 304 percent of GDP, according to a recent study by fund manager Trey Reik of Clapboard Hill Partners.The title of Auerback's essay was, "Last Orders for the US Dollar."[6]
Auerback opened his treatise with a recent quote from former Federal Reserve Chair Paul Volcker that should have sent politicians (all of us) feverishly to work on a survival plan.
Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember…. Nothing in our experience is comparable… But no one is willing to understand this and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it's what feeds our consumption binge… the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes… We are skating on increasingly thin ice."[7]
****************
SOME DOTS
ENERGY
1. The world's network of crude oil pipelines also is now operating at virtually 100% capacity. For almost all of 2004, the world's tanker system operated at full capacity too. This sparked an unprecedented rise in taker rates, which added up to $5 to $6 per barrel to the wellhead price of oil in some key long-haul export routes. - Matthew Simmons. Why are no more tankers being built? Because soon there won't be enough oil to ship to cover what it would cost to build them.
2. Also from Simmons: [In the oil industry] A lack of qualified manpower is looming high on the list of capacity problems. In addition, the many layoffs and downsizing events that our industry has endured… As a consequence, we now have an aging workforce at a time when the technical intensity of the industry is increasing each year. - Why? Because the industry knows it is going to collapse and no replacements are being trained to fill short-term, dead-end careers.
3. Officials of Mexico's state-owned oil company PEMEX have announced that Mexico's largest oil field, Cantarell, will enter permanent decline this year. - Bloomberg, March 1, 2005.
4. ExxonMobil is selling its 19 percent stake in China's Petroleum and Chemical Corporation - Forbes, March 2, 2005. This is a likely move to cut losses in the event of war.
5. Ukraine and Georgia have agreed to reverse the flow of oil in a strategic pipeline from the Black Sea thus effectively reducing Russia's control over some Caspian basin exports. - BusinessWeek, Feb. 28, 2005. A Ukrainian alliance with NATO would deprive the Russian Navy of access to its Black Sea ports.
6. In a move to bypass US-led efforts to reduce her influence in the world's oil supply chain and access to markets, Russia approved the rush construction of three new oil terminals on the Gulf of Finland to supply Europe. - Moscow News, March 1, 2005. (Three days after the above pipeline decision? Surely these power blocks had been making contingency plans for these events for years).
7. Saudi Arabia may have already peaked in production as a result of over-producing its fields. Overproduction by water (and gas) injection destroys a reservoir's geologic structure. It is an undisputed certainty that if Saudi Arabia has peaked, the world has peaked. - Al Jazeera, February 20, 2005.
8. Oil has been rising steadily in terms of dollars, but now it has begun to increase in price relative to the Euro - James Turk, GATA.
9. Petro Canada has decided to invest $3 billion in the development of Alberta's tar sands in spite of high costs, enormous environmental destruction and dwindling supplies of natural gas needed to make steam to wash the sands. - The Globe and Mail, March 2, 2005.
10. Royal Dutch Shell, which has downgraded its reserves four times in the last two years (as a result of fraudulent bookkeeping), has announced it may experience a 5% production decline this year. - Forbes, March 2, 2005. The truth comes out.
11. Iran and Mexico have signed an MOU for mutual assistance in developing oil and gas projects. - Tehran Times, Feb. 20, 2005.
MILITARY AND POLITICAL
1. Spain's foreign minister has voiced concerns held in Britain and elsewhere in Europe that the era of the nation-state is coming to an end as regional powers replace national identity. - The Sun, March 2, 2005. Energy-starved Britain will ultimately be forced to join the EU.
2. After Canada recently refused to participate in the US Strategic Missile Shield, the US government accused Canada of relinquishing sovereignty over its airspace and prompted a statement from US Ambassador Paul Cellucci that the US would shoot down missiles over Canada whether Canada gave permission or not. - CP, Feb. 24, 2005. [Two years ago I clipped a story from the National Post stating that Canada should not be surprised when US troops occupied the country to protect the US. From Canada?!]
3. US forces in Iraq have apparently attempted to murder an Italian journalist who was freed after negotiations with her captors. They succeeded in killing an Italian Secret Service agent and US stories of the account are falling under widespread criticism and rebuttal. Anti-American sentiment in Italy is bubbling over. - Multiple sources.
4. China is experiencing massive shortages of coal to power its electrical generation. - Multiple sources.
5. China is already buying and hoarding 60% of the world's commodities: (Oil, Cement, Aluminum, Copper, Zinc, Manganese, Steel, Coal, Gold, Silver, etc.). It has bought so much cement that it has caused a slowdown in US construction. Last year it bought 90% of the world's steel output and shipped it to China - Multiple sources. Why? Because soon there won't be enough fuel for the globalized transport of such heavy things, nor, presumably, for their industrial exploitation. The world may also be at war shortly, further endangering international trade and transport.
6. China has announced a 12.6% increase in its defense budget for next year, pushing it into an overt arms race with the US. - Reuters, March 4, 2005. This has put the enduring China-Taiwan flash point back on the front burner as China has warned Taiwan against secession and the US, Japan and Taiwan have countered with equally risky rhetoric against China. Taiwan is crucial because of its location the South China Sea and proximity to smaller but accessible oil deposits in the Spratly Islands. Even more, should China incorporate Taiwan into its borders, its claims to territorial waters as far as the continental shelf would effectively deny Japan any future exploration off its western coast. - Multiple sources. Japan, which has no energy resources, is in deep trouble.
7. Chinese energy shortages have resulted in what may be selective blackouts of Japanese auto and other firms manufacturing in China. - Asia Times, December 9, 2004.
8. As frictions intensify between Japan and China [Knight-Ridder, Feb. 15, 2005], Japan - America's strongest ally in the Pacific - has been forced to sign an oil agreement with Iran [New York Times, Feb. 16, 2005]. This agreement came as a slap in the face to the US which had opposed it.
9. Japan has announced a $1.1 billion emergency plan to build liquefied natural gas terminals. - Bloomberg, February 14, 2005. Twelve days later it was announced that Japanese destroyers had driven away Chinese exploration vessels in international waters that were too close to a possible natural gas field (claimed by Japan) in the East China Sea. - The Herald Sun, January 26, 2005.
10. China has begun placing nuclear-capable ballistic missiles on some of its submarines for the first time. - The Washington Times, December 3, 2004.
11. Last November a Chinese nuclear submarine intruded deep into Japanese territorial waters and was escorted (chased) by Japanese Navy ships back into international waters. - The Asia Times, Jan. 16, 2005
12. China and India have agreed to hold first-ever joint naval exercises in the Indian Ocean. - San Francisco Chronicle, Nov. 13, 2004.
13. China is beginning a push to control the strategic Straights of Malacca through which 80% of its imported oil passes. This strategic waterway - only 1.5 miles wide at its narrowest point - lies between the countries of Indonesia, Malaysia and Singapore. - Asia Times, March 2, 2005. Yes, and 40% of the world's piracy occurs there.
14. Indonesia has sent warships in an escalating dispute with Malaysia to an island off its west coast. The subject of the dispute: Malaysian oil exploration. - www.news.com.au, March 6, 2005.
15. The following day Indonesia dispatched F16 fighters to the Malaysian border, escalating the oil conflict. - The Standard, Match 7, 2005.
16. A number of stories have reported that Japan is secretly considering the abandonment of its pacifist constitution and - if it so chose - could have nuclear weapons in months, if not weeks. - Multiple sources.
17. Britain's parliament is in revolt over a proposed "terrifying" house arrest plan which would enable the government to order residents locked up in their own homes without trial. - The Independent, March 2, 2005.
18. Venezuela intends to purchase advanced MiG 29s from Russia, capable of downing F16s [and having no software systems that can be compromised by US technology]. - Reuters, Feb. 12, 2005.
19. Venezuela (the world's fifth largest oil exporter) has purged its state-owned oil company PdVSA of pro-American managers and is implementing a 17% tax increase on the revenues of foreign oil companies doing business there. - Multiple sources.
20. Venezuelan President Hugo Chavez has traveled to New Delhi, India where he chose to make a public statement that he would cut off Venezuelan oil supplies to the US in the event of any intervention or a US-directed attempt on his life. The Indian government has thus tacitly endorsed the threat. Meanwhile, the US ambassador to Venezuela has imponderably replied that if that happened the US would just go somewhere else to get its oil. [Where? Iran? Canada (which is signing contracts with China)? West Africa? There is no elasticity anywhere.] - Multiple sources.
21. Venezuela has sold its (already in decline) San Cristobal oil field to India. - Times of India, March 6, 2005
22. President Bush has given Syria a non-negotiable deadline of May 1 to withdraw its forces from Lebanon. One million Lebanese (almost a quarter of the population) have marched in the streets in protest. - Multiple sources.
ECONOMICS
1. Federal Reserve Chairman Alan Greenspan told Congress the record U.S. budget deficit is "unsustainable'' and that spending cuts are needed before costs balloon for Social Security and other benefit programs. - Bloomberg, March 2, 2005.
2. German Chancellor Gerhard Schroeder has stated that high oil prices are threatening the global economy and that those prices will be one of the most important items on the agenda of the coming G-8 summit. - The Daily Star, March 1, 2005.
3. The Bank of International Settlements has made it official: the dollar dump is underway. Since 2001 the number of dollars held by Asian central banks has fallen by 13% and the rate of sell-off is increasing. - Reuters, March 6, 2005.
4. OPEC has announced that oil prices could reach $80 per barrel within two years. - Agence France Presse, March 3, 2005.
5. A research foundation in Dubai has affirmed that western banks have rigged and suppressed gold prices. - Gold Anti-Trust Action Committee, http://www.lemetropolecafe.com/.
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THE NEW WORLD ORDER
The New World Order is not a monolith; no single group of rich folks sits together in one room debating our planetary future. It is, quite literally, a new order in which world power aggregates along geographic/geologic lines, forcing regions to become players against each other and running roughshod over the nationalist sentiments of their subject populations. The regions are Europe (including Britain), Asia, South America and North America. Woe to those nations who are stuck in between. In spite of Sino-Japanese tension, Japan, China and South Korea have urged the creation of a Free Trade agreement to cover the Western Pacific. Geography and money will prove to be the ultimate trump cards because geography is governing economic decision-making. There may be a war between China and Japan but ultimately Japan (like the UK vis-a-vis Europe) will find itself swallowed into regional hegemony, either as a winner or as a loser.
Take a look at Orwell's 1984 again. It is a wonder how he saw so much. Yet behind all of this realignment, enormous streams of wealth or capital are being expended and - most importantly - transferred behind the scenes. The people controlling that money are not seeing their control dissipate as the nation-states vanish. Money makes its own rules.
Profits were made during the cold war by continuing the controlled escalation of tensions between the superpowers while secretly preventing those tensions from reaching critically dangerous levels. The major players included Armand Hammer, the Rothschilds, the Bushes, Averill Harriman, inter alia.
These people always find ways to eke profits from a system that is in meltdown. They make money on the way up. They make money on the way down. Their appalling justification, their pact with the devil that makes this all possible, is that "As long as we're making money then everything must be OK." This is what the real PTB (Powers That Be) believe. This is the final distilled definition of "the bottom line".
The problem lies in the definition of "The Powers That Be." Most people still think in terms of nation states. I always think in terms of money, even to the point of looking at money (the way it functions now) as the PTB without attachment to a human or national identity.
Not too long ago I had a dialogue with Catherine Austin Fitts after which an epiphany struck. As the human race blows itself into extinction, or destroys the climate, or starves itself to death, the last corporate merger and acquisition will take place. And at the same moment as mankind dies, the CFO of "GlobalCorp" will be shouting, "Hooray! We did it!"
Those who win in a rigged game get stupid. We have all played this game (to one degree or another). And compared to the rational, far-sighted humanitarians that Jefferson and Whitman hoped for and expected, we are all frightfully stupid.
In spite of all the warning signs that demand and energy use must be curbed immediately, the only commercial effect of Peak Oil has been to increase consumption as much as possible - so as to get as much "money" as possible, as quickly as possible. This before the instant, possibly only months away, when money - because of a lack of energy - becomes valueless. Solutions that should enable a reduction in oil consumption are only functioning as an insane rationale for using more. The pity of this utterly unnecessary disaster is matched only by the arrogance that created it.
With unmistakable desperation, China, the US, Russia, Europe and the Middle East are fiercely jockeying for a measly 40 billion barrels of Caspian heavy-sour oil instead of the 350 billion we were promised by the major oil companies a decade ago. Caspian oil has some of the highest sulfur content on the planet. It is expensive and environmentally destructive to refine. The mountains of sulfur around the Caspian are now so large as to be visible from space. Do you not see the desperation here?
The only way to curb demand is to pull the plug on global economies, starting first with the already partially cannibalized US economy. Our manufacturing has been stolen or given away for "spare parts." So have our savings, our Constitution, our resources, our credit, our credibility, our confidence, our manufacturing base, our jobs; and soon our houses, our personal bank accounts and ultimately our hope. The United States is being liquidated after a fait accompli merger and acquisition.
The bottom line turns out to be the suicide of the human race as mergers and acquisitions lead to the final moment of malignant capitalism: "the last corporation standing."
GlobalCorp becomes Global corpse.
Hurray, we did it!
To look on the brighter side of this, my brother in arms Matt Savinar helped me to see the good in Peak Oil. He wrote, "When people ask me what is 'positive' about Peak Oil, I tell them (only half-jokingly) that: "well, if there is no collapse, we're all going to be chipped, tagged, drugged with FOX news being beamed into our brains while living in slums patrolled by robotic soldiers with strangely familiar Austrian accents."
The fire has begun.
****************
FOR THE RECORD - FTW REORGANIZATION PENDING
I wake up now on a daily basis knowing that at any moment the story might break signaling that the collapse has been triggered. It is my mandate to scan the horizon for signs of this, to help discern where the blows will fall, how hard, how quickly and where they will have the most impact. Effective immediately (and taking into account stories FTW has already committed to publish), it is imperative that FTW transform itself into an informational / intelligence lifeboat for those who are listening.
I will not be writing for FTW for a period of approximately two months while I complete a corporate reorganization that is necessary to adapt to the world as it is, not as we might wish it or pray for it to be.
FTW now has tens of thousands of daily readers who understand what is happening and who are urging me to stop trying to convince the rest of the world. They want us instead, try to and help those who are already convinced. We cannot save everyone. We can only help those who are asking for it. That is our constituency - our contract. The doors will always be open for latecomers.
What you will see in two months or less is a new FTW; focused, precise, and more useful on a day to day basis. If I lose support from progressives or activists for this, so be it. If FTW falls from grace with some for failing to be politically correct, then all I can say is "Good luck to you."
We must all do what we must do and do it now. My conscience is clear that I have done all that is possible to warn. When a tsunami is coming there is a point at which one must stop trying to warn the indifferent and just get out of the way and help others who are also trying to get out of the way. For those who now see this, FTW hopes to become at least a partial bridge to your safety. In order to do that, other bridges must be abandoned.
ENDNOTES
1. Fleckenstein, Bill; Prerequisite to current events: Bubble 101; MSN, Feb. 28, 2005.
2. McKillop, Andrew; Fundamentals in the oil-pricing game; http://www.vheadline.com; March 2, 2005.
3. Lundberg, Jan; The Global Nutcracker Called Peak Oil; EV World, Feb. 20 2005.
4. Detroit News editorial by Thomas Bray, February 27, 2005 quoting authors (and Neocon / Bush allies) Peter W. Huber and Mark P. Mills.
5. Crude oil prices may rise as output trails demand; Xinhuanet, February 28, 2005; www.chinaview.cn.
6. Auerback, Marshall; Last Orders for the US Dollar; www.prudentbear.com, March 1, 2005.
7. Ibid.
ENDS
Wednesday, 23 March 2005, 12:55 pm
Opinion: From The Wilderness Publications
GlobalCorp.
I AM NOT A POLITICIAN
THE FIRE IS NO LONGER ON ITS WAY
IT HAS BEGUN
An Important Announcement
by
Michael C. Ruppert
© Copyright 2005, From The Wilderness Publications, www.fromthewilderness.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.
Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it. - Mark Twain
(special thanks to Bill Tamblyn for finding this quote.)March 10, 2005, PST 0900 (FTW) -- I am not a politician. I will never be a politician.
With this article both I and the FTW family will never again think in terms of whom we might offend or what bridges we need to build, burn or fireproof. As Don Henley wrote in a song of profound spiritual gratitude, "Sometimes you get your best light from a burning bridge." I'm going to burn a few with this essay.
Peak Oil is no longer on the way. It is here. Forget for a moment whether or not global oil production has actually begun (see below) its hopelessly irreversible decline. We will not know that for certain until sometime after it happens. The political fact, however, is that global inertia in response to Peak has driven our species, all of it, past the point of no return. There is no changing course for us. We have committed to a path of bloody destruction that can no longer be postponed or evaded. Energy investment banker Matthew Simmons - long a smoke alarm for Peak Oil - has said repeatedly, "The problem is that the world has no Plan B." Simmons is right.
Seeing clearly that there is no Plan B, it is now also too late to come up with a Plan C or Plan D. What I had hoped to accomplish with Crossing the Rubicon is now a missed opportunity. Yet the map so many of us drew in Rubicon remains astonishingly accurate and unaltered. It may prove to be an indispensable survival tool in and of itself very shortly.
ADVERTISEMENT
Politicians come in varieties. They are in business. They are sometimes activists. Many pose as journalists. Some are economists and academics. They work in think tanks and manage the editorial decisions of major press outlets. Many average citizens behave and think like politicians because they accept as their primary mantras: "Don't rock the boat," and "Don't offend anyone." Politicians are more deadly than any weapon. They see their primary mission as building consensus to improve outward appearances.
For a politician the questions are always: "How can I superficially address an immediate problem without going to its root causes? What is the least amount of work I have to do to make this go away while I'm on duty? How can I deal with this problem without burning bridges?" Lately, economists, business and religious leaders, and everyday people have been behaving more like politicians than politicians themselves. Much like the incestuous, sealed-off, fetid Bush administration, the politicians are going to other politicians to make policy - when they dare even to do that. Refusing to make policy is also a policy.
In fact, most people have become politicians and it may well be that political correctness (including the fear of speaking out) - to whatever degree it is observed - will be the sword on which we now (not tomorrow) impale ourselves.
Bridges are burning all around us; bridges to responses that might have mitigated the already brutal (and just beginning) ravages of Peak Oil; bridges to reduce the likelihood of war and famine; bridges to avoid our selectively chosen suicide; bridges to change at least a part of energy infrastructure and consumption; bridges to becoming something better than we are or have been; bridges to nonviolence. Those bridges are effectively gone.
Stan Goff was right when he warned activists that "the gun," in all its forms, would be brought out before this was over. It was inevitable. False flag terror attacks, a fake war on terrorism, routine political murders, stolen elections, and Republican traffic in pedophilia remain causes for outrage and defiance, but they can no longer be useful avenues to justice: the legal system is broken. It's broken for reasons far greater than what used to be called corruption. And it cannot be fixed when a world war and unprecedented economic and ecological collapse are smashing down every wall between humanity and the unthinkable.
Politicians are creatures of economics. Their success has always been measured first and only by what economic benefits they returned to constituents or themselves. The victim has been the future. We have all told the politicians what we really want them to do for us while speaking platitudes from the other side of our mouths. As I have said for so many years, we are all prisoners of the way money works. Until we change that, any solution is only temporal and illusory. No electoral change is possible now that elections all over the world have sworn their allegiance to privately owned software programs and obvious manipulation.
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FOR THOSE WHO CAN READ THE MAP
As the evidence grows stronger that we are at Peak now (or very close to it), there is a distinct correlation between oil price hikes and military budget increases, weapons deployment, warfare and covert operations around the world. Economists don't consider such things so they don't report on them. Their orthodoxy scorns any integrated view of world developments outside their own discipline.
For long-time readers of FTW I need do little more than discuss a few recent developments to put this in perspective. For the rest I will provide you with some of a great many available dots you can connect if you care to. Most people find themselves unable to tolerate the sight of the pattern which the connected dots reveal. After this, FTW will no longer try to detail the dots of Peak Oil. What we have published over the last seven years is proof enough. We had it right. I refuse to go over it again. Those who get it now, get it. Those who do not may possibly be beyond saving, because their own choices have deprived them of critical months of preparation for the crisis - especially since most of this "preparation" is psychological in nature. It is very hard and very painful to get one's mind to accept this reality.
Nature does not grant time outs.
THE CIA
I recently had a conversation with someone who spent 17 years in the CIA's Directorate of Operations. Thinking of the purge and power shift that has - over the course of the last nine months - decimated the Central Intelligence Agency (long my Bête Noir) and shifted much of its power to the Pentagon, I asked the following question.
"Look, the agency does many things in many roles from raw intelligence gathering, to economic warfare, to satellite recon, to paramilitary operations requiring cover and deniability, to drug smuggling. But since its inception it was always focused in large part on medium and long-term intelligence gathering and covert operations through the costly, patient, expensive means of placing NOCs (non-official covers) or assets in missions where it might take five, ten or fifteen years to bear fruit. These programs were always centered on "what if" contingencies which inherently implied that multiple outcomes were possible; that there were alternative futures to be influenced and shaped.
"Battlefield intelligence is a different critter. It presupposes that there is nothing more important than the battle that has been joined at this moment. If the battle is not won, there are no future choices. Hence nothing matters other than the war that is being fought today. No Yaltas or Potsdams; no future deep cover moles will be needed.
"Every country in the world is betting everything it has on this one hand knowing that after 2007 or 2008 the game ends. The map of the future after that is unknowable and, to large extent, irrelevant. That's why Rumsfeld has won the battle to control American intelligence operations and why the new National Intelligence Director John Negroponte is getting the job.
"Is that right?"
Without the slightest hesitation the former CIA employee answered, "Yes."
It is the ultimate testimony to the madness of Donald Rumsfeld, Paul Wolfowitz and Dick Cheney that there are no more tomorrows left to fix anything. Since 9/11, and especially since a second presidential election was stolen four months ago, the setting for a real Armageddon has been locked in place. It may well have been for years before that.
GASOLINE PRICES
A recent USA TODAY story, giving us the new word "Petronoia," warned that gasoline prices could jump by 25 cents per gallon within the next few days. That increase, it said, would take $90 million per day out of a consumer economy that relies on profligate spending to sustain already bursting bubbles. How are we getting the money to sustain these bubbles? We are, according to Bill Fleckenstein of MSN, using our houses as ATMs just to keep up, even as the housing bubble has already begun to burst.[1] Our paychecks certainly aren't increasing.
OIL PRICES
Oil has topped $54 a barrel. It's gone up more than 25% in less than three months and fifty per cent over the last year; 400% since 1999. This amid strong signs that global oil production may have already peaked, as declines around the world are not being offset by new production. New fields may come online but the respite will be very short-lived. There may be a few "mega" projects (about a six-day supply for the planet in each) which may produce momentary price declines but the trend is irreversible. Official bodies like the International Energy Administration (IEA) are openly wishing that demand growth might slow in 2005, when actual figures already prove this wish utterly fanciful. China's oil demand is expected to grow by 33% this year. Industrialized and developing nations are expanding their economies as fast as possible to generate cash and liquidity as a means of securing more oil.
The vicious cycle is in full swing. And yet, according to economist Andrew McKillop…
We then move on to actual declines in production. For the majority of non-OPEC producers - (in fact nearly all except Russia and some Central Asian producers) rates of decline are stubbornly high, despite vaunted technology improvements…
One of the biggest problems facing the IEA [a UN sponsored agency], the EIA [a US government agency] and a host of analysts and 'experts' who claim that 'high prices cut demand', either directly or through damping oil economic growth, is that this does not happen in the real world. Since early 1999 oil prices have risen about 400%. Oil demand growth in 2004 at nearly 4% was the highest in 25 years. In each year since 1999 world oil demand growth has been higher than the previous year - as prices rise.[2]
McKillop's analysis, which essentially says that rising oil prices are either good or of no consequence, falls way short for two reasons. Energy investment banker Matt Simmons a year ago in Berlin stated that he saw the actual point at which price would curb demand at around $180 per barrel. The consumers are bearing most of the costs of these increases. Is this the consumers' choice, or is it simply the point beyond which "the American way of life" will become impossible, regardless of how many incremental cuts people accept?
Go ahead; try to choose to use less oil of your own volition. What reductions are available to you are minimal because the world in which you must make your house payments, feed your family, drive to work and pay your bills is leaving you little choice but to consume more and get less for your money. Only at around $180 a barrel will the consumer no longer be able to subsidize the corporate and economic superstructure on his/her shoulders. This is essentially what Simmons was saying.
The poor will be the first to suffer and they will suffer the most. They will be the first to die.
Secondly, McKillop assumes a "trickle down" benefit to consumers from high prices. International capital flows and your own checkbook should be enough to dispel this belief. Need I say more? Didn't we hear enough about trickle-down from Ronald Reagan?
PRODUCTION
Oil industry guru Jan Lundberg - who seems to be getting a lot less air time than he used to - recently wrote the following brilliant assessment for (ironically of all places) Electric Vehicle (EV) Magazine. Lundberg got it right.
The end of abundant, affordable oil is in sight, and the implications are colossal. About now in our hydrocarbon phase of human history, we have pulled out of the Earth approximately half of the available petroleum (crude oil and natural gas). The other half still in the ground is harder to extract and may not - as assumed - fuel the global economy or even provide a transition to another phase…
This means that the next tough oil shortage, even if it is not acknowledged as a post-peak oil extraction phenomenon of diminishing supply, will cripple the globalized economy. Understanding of both the economics and social dynamics of collapse is rare, and even when it is present there is an absence of taking into account the "market factor" in ushering in collapse…
Despite the need to be prepared for imminent, final energy shortage - which could happen now or in several years at the latest - people persist in focusing too much on the likely date of the passing of the peak. It is already clear that the oil industry and OPEC numbers on oil reserves are suspect.
The scenario I foresee is that market-based panic will, within a few days, drive prices up skyward. And as supplies can no longer slake daily world demand of over 80 million barrels a day, the market will become paralyzed at prices too high for the wheels of commerce and even daily living in "advanced" societies. There may be an event that appears to trigger this final energy crash, but the overall cause will be the huge consumption on a finite planet.
The trucks will no longer pull into Wal-Mart. Or Safeway or other food stores. The freighters bringing packaged techno-toys and whatnot from China will have no fuel. There will be fuel in many places, but hoarding and uncertainty will trigger outages, violence and chaos. For only a short time will the police and military be able to maintain order, if at all. The damage that several days' oil shortage and outage will do will soon wreak permanent damage that starts with companies and consumers not paying their bills and not going to work.
After an almost instant depression seizes the modern industrialized world, and nation-states break down, the frantic attempts of people to feed themselves, stay warm and obtain fresh water (pumped presently via petroleum to a great extent), there will be no rescue. Die-off begins. The least petroleum-dependent communities will survive best. These "backward" nations will be emulated by the scrounging survivors of the U.S. and the rest of the "developed" world, as far as local food production will be tried - in a paved-over, toxic landscape by people who have lost touch with the land...
The prospects of mitigating peak oil or avoiding collapse are almost nil. U.S. petroleum demand in 2004 grew at its strongest rate in five years. In December the daily consumption of refined oil was 21 million barrels in the U.S, a quarter of world use. The U.S. leads the industrialized world in population growth, part of a domestic policy to assure more car and oil sales…
… The Earth cannot, as of the world oil peak in extraction, give up ever greater quantities of black gold. Most of the world exporting companies are now reducing extraction rates due to fewer discoveries and depleted fields. Oil production in 18 producer countries has passed its peak and is declining faster than previously thought: at about 1.14 million barrels a day.
"International Energy Agency figures put the total spare capacity of all 11 countries in OPEC at just 330,000 bpd (down from 6 million bpd in 2002). Conventional Saudi spare capacity is zero... An IEA report from August 2004 indicates Saudi Arabia needs up to 800,000 bpd of newly discovered oil each year just to offset declining fields and maintain its current production level." [Al-jazeera] - This can't happen, so watch for the ensuing energy crisis.
The world needs to produce another 2,723,530.2 barrels per day by the end of 2005 just in order to stand still…
Petroleum is the Great Leveler, in the sense of "leveling" or flattening oil civilization. But petroleum will also be the Great Leveler in terms of equalizing everyone: People will go through a final, grasping petroleum grab with whatever funds and connections they have, before the attempt fails for good. Then all people will have no choice but to work together or perish. Until then, we have skewed values: for example, when a kindly old lady drives to a shop and has her charitable concerns, the use of oil makes her a killer of the planet and she is not pursuing a sustainable form of transportation. Meanwhile, a mean old man who scowls at little children who walks to the shop might be a much more valuable citizen in a practical fashion that matters to the world.[3]
THE MOST EVIL STATEMENT I HAVE EVER HEARD
Detroit News columnist Thomas Bray recently described an interview with two "experts"; authors who come from the corporate/industrial/Neocon camp. The aberration of his thinking is symptomatic of the guilt we all share and the consequences we all seem to be begging for.
"We will never stop craving more," say Huber and Mills, "nor should we ever wish to. Energy is what brings light out of dark, civilization out of disorder, prosperity out of poverty."[4] What was the title of the book that Bray was so jazzed about? The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy.
Contrast all of the above with the following February 28 quotation from China's Xinhuanet news agency:
Global demand may average 84 million barrels a day in 2005, while daily production in January was only 83.6 million barrels, according to the International Energy Agency. Oil prices have risen 11 per cent in the past three weeks in New York on growing concern that OPEC and other exporters will fail to keep up with demand this year.[5] That all of these factors are forming a perfect storm is now clear.
Marshall Auerback, a brilliant economist (www.prudentbear.com) who dares to see the world whole, notes:
"At the time of the 1929 stock market crash, total US credit was 176 percent of Gross Domestic Product. In 1933 with GDP imploding and the real value of debt rising even faster, total credit rose to 287 percent of what was left of GDP…In 2000 at the top of the late bull market, total credit was 269 of GDP. An extraordinary statistic to be sure but dwarfed by today's figure, in which total credit stands at a whopping 304 percent of GDP, according to a recent study by fund manager Trey Reik of Clapboard Hill Partners.The title of Auerback's essay was, "Last Orders for the US Dollar."[6]
Auerback opened his treatise with a recent quote from former Federal Reserve Chair Paul Volcker that should have sent politicians (all of us) feverishly to work on a survival plan.
Below the favorable surface [of the economy], there are as dangerous and intractable circumstances as I can remember…. Nothing in our experience is comparable… But no one is willing to understand this and do anything about it… We are consuming… about six per cent more than we are producing. What holds the world together is a massive flow of capital from abroad… it's what feeds our consumption binge… the United States economy is growing on the savings of the poor… A big adjustment will inevitably become necessary, long before the social security surpluses disappear and the deficit explodes… We are skating on increasingly thin ice."[7]
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SOME DOTS
ENERGY
1. The world's network of crude oil pipelines also is now operating at virtually 100% capacity. For almost all of 2004, the world's tanker system operated at full capacity too. This sparked an unprecedented rise in taker rates, which added up to $5 to $6 per barrel to the wellhead price of oil in some key long-haul export routes. - Matthew Simmons. Why are no more tankers being built? Because soon there won't be enough oil to ship to cover what it would cost to build them.
2. Also from Simmons: [In the oil industry] A lack of qualified manpower is looming high on the list of capacity problems. In addition, the many layoffs and downsizing events that our industry has endured… As a consequence, we now have an aging workforce at a time when the technical intensity of the industry is increasing each year. - Why? Because the industry knows it is going to collapse and no replacements are being trained to fill short-term, dead-end careers.
3. Officials of Mexico's state-owned oil company PEMEX have announced that Mexico's largest oil field, Cantarell, will enter permanent decline this year. - Bloomberg, March 1, 2005.
4. ExxonMobil is selling its 19 percent stake in China's Petroleum and Chemical Corporation - Forbes, March 2, 2005. This is a likely move to cut losses in the event of war.
5. Ukraine and Georgia have agreed to reverse the flow of oil in a strategic pipeline from the Black Sea thus effectively reducing Russia's control over some Caspian basin exports. - BusinessWeek, Feb. 28, 2005. A Ukrainian alliance with NATO would deprive the Russian Navy of access to its Black Sea ports.
6. In a move to bypass US-led efforts to reduce her influence in the world's oil supply chain and access to markets, Russia approved the rush construction of three new oil terminals on the Gulf of Finland to supply Europe. - Moscow News, March 1, 2005. (Three days after the above pipeline decision? Surely these power blocks had been making contingency plans for these events for years).
7. Saudi Arabia may have already peaked in production as a result of over-producing its fields. Overproduction by water (and gas) injection destroys a reservoir's geologic structure. It is an undisputed certainty that if Saudi Arabia has peaked, the world has peaked. - Al Jazeera, February 20, 2005.
8. Oil has been rising steadily in terms of dollars, but now it has begun to increase in price relative to the Euro - James Turk, GATA.
9. Petro Canada has decided to invest $3 billion in the development of Alberta's tar sands in spite of high costs, enormous environmental destruction and dwindling supplies of natural gas needed to make steam to wash the sands. - The Globe and Mail, March 2, 2005.
10. Royal Dutch Shell, which has downgraded its reserves four times in the last two years (as a result of fraudulent bookkeeping), has announced it may experience a 5% production decline this year. - Forbes, March 2, 2005. The truth comes out.
11. Iran and Mexico have signed an MOU for mutual assistance in developing oil and gas projects. - Tehran Times, Feb. 20, 2005.
MILITARY AND POLITICAL
1. Spain's foreign minister has voiced concerns held in Britain and elsewhere in Europe that the era of the nation-state is coming to an end as regional powers replace national identity. - The Sun, March 2, 2005. Energy-starved Britain will ultimately be forced to join the EU.
2. After Canada recently refused to participate in the US Strategic Missile Shield, the US government accused Canada of relinquishing sovereignty over its airspace and prompted a statement from US Ambassador Paul Cellucci that the US would shoot down missiles over Canada whether Canada gave permission or not. - CP, Feb. 24, 2005. [Two years ago I clipped a story from the National Post stating that Canada should not be surprised when US troops occupied the country to protect the US. From Canada?!]
3. US forces in Iraq have apparently attempted to murder an Italian journalist who was freed after negotiations with her captors. They succeeded in killing an Italian Secret Service agent and US stories of the account are falling under widespread criticism and rebuttal. Anti-American sentiment in Italy is bubbling over. - Multiple sources.
4. China is experiencing massive shortages of coal to power its electrical generation. - Multiple sources.
5. China is already buying and hoarding 60% of the world's commodities: (Oil, Cement, Aluminum, Copper, Zinc, Manganese, Steel, Coal, Gold, Silver, etc.). It has bought so much cement that it has caused a slowdown in US construction. Last year it bought 90% of the world's steel output and shipped it to China - Multiple sources. Why? Because soon there won't be enough fuel for the globalized transport of such heavy things, nor, presumably, for their industrial exploitation. The world may also be at war shortly, further endangering international trade and transport.
6. China has announced a 12.6% increase in its defense budget for next year, pushing it into an overt arms race with the US. - Reuters, March 4, 2005. This has put the enduring China-Taiwan flash point back on the front burner as China has warned Taiwan against secession and the US, Japan and Taiwan have countered with equally risky rhetoric against China. Taiwan is crucial because of its location the South China Sea and proximity to smaller but accessible oil deposits in the Spratly Islands. Even more, should China incorporate Taiwan into its borders, its claims to territorial waters as far as the continental shelf would effectively deny Japan any future exploration off its western coast. - Multiple sources. Japan, which has no energy resources, is in deep trouble.
7. Chinese energy shortages have resulted in what may be selective blackouts of Japanese auto and other firms manufacturing in China. - Asia Times, December 9, 2004.
8. As frictions intensify between Japan and China [Knight-Ridder, Feb. 15, 2005], Japan - America's strongest ally in the Pacific - has been forced to sign an oil agreement with Iran [New York Times, Feb. 16, 2005]. This agreement came as a slap in the face to the US which had opposed it.
9. Japan has announced a $1.1 billion emergency plan to build liquefied natural gas terminals. - Bloomberg, February 14, 2005. Twelve days later it was announced that Japanese destroyers had driven away Chinese exploration vessels in international waters that were too close to a possible natural gas field (claimed by Japan) in the East China Sea. - The Herald Sun, January 26, 2005.
10. China has begun placing nuclear-capable ballistic missiles on some of its submarines for the first time. - The Washington Times, December 3, 2004.
11. Last November a Chinese nuclear submarine intruded deep into Japanese territorial waters and was escorted (chased) by Japanese Navy ships back into international waters. - The Asia Times, Jan. 16, 2005
12. China and India have agreed to hold first-ever joint naval exercises in the Indian Ocean. - San Francisco Chronicle, Nov. 13, 2004.
13. China is beginning a push to control the strategic Straights of Malacca through which 80% of its imported oil passes. This strategic waterway - only 1.5 miles wide at its narrowest point - lies between the countries of Indonesia, Malaysia and Singapore. - Asia Times, March 2, 2005. Yes, and 40% of the world's piracy occurs there.
14. Indonesia has sent warships in an escalating dispute with Malaysia to an island off its west coast. The subject of the dispute: Malaysian oil exploration. - www.news.com.au, March 6, 2005.
15. The following day Indonesia dispatched F16 fighters to the Malaysian border, escalating the oil conflict. - The Standard, Match 7, 2005.
16. A number of stories have reported that Japan is secretly considering the abandonment of its pacifist constitution and - if it so chose - could have nuclear weapons in months, if not weeks. - Multiple sources.
17. Britain's parliament is in revolt over a proposed "terrifying" house arrest plan which would enable the government to order residents locked up in their own homes without trial. - The Independent, March 2, 2005.
18. Venezuela intends to purchase advanced MiG 29s from Russia, capable of downing F16s [and having no software systems that can be compromised by US technology]. - Reuters, Feb. 12, 2005.
19. Venezuela (the world's fifth largest oil exporter) has purged its state-owned oil company PdVSA of pro-American managers and is implementing a 17% tax increase on the revenues of foreign oil companies doing business there. - Multiple sources.
20. Venezuelan President Hugo Chavez has traveled to New Delhi, India where he chose to make a public statement that he would cut off Venezuelan oil supplies to the US in the event of any intervention or a US-directed attempt on his life. The Indian government has thus tacitly endorsed the threat. Meanwhile, the US ambassador to Venezuela has imponderably replied that if that happened the US would just go somewhere else to get its oil. [Where? Iran? Canada (which is signing contracts with China)? West Africa? There is no elasticity anywhere.] - Multiple sources.
21. Venezuela has sold its (already in decline) San Cristobal oil field to India. - Times of India, March 6, 2005
22. President Bush has given Syria a non-negotiable deadline of May 1 to withdraw its forces from Lebanon. One million Lebanese (almost a quarter of the population) have marched in the streets in protest. - Multiple sources.
ECONOMICS
1. Federal Reserve Chairman Alan Greenspan told Congress the record U.S. budget deficit is "unsustainable'' and that spending cuts are needed before costs balloon for Social Security and other benefit programs. - Bloomberg, March 2, 2005.
2. German Chancellor Gerhard Schroeder has stated that high oil prices are threatening the global economy and that those prices will be one of the most important items on the agenda of the coming G-8 summit. - The Daily Star, March 1, 2005.
3. The Bank of International Settlements has made it official: the dollar dump is underway. Since 2001 the number of dollars held by Asian central banks has fallen by 13% and the rate of sell-off is increasing. - Reuters, March 6, 2005.
4. OPEC has announced that oil prices could reach $80 per barrel within two years. - Agence France Presse, March 3, 2005.
5. A research foundation in Dubai has affirmed that western banks have rigged and suppressed gold prices. - Gold Anti-Trust Action Committee, http://www.lemetropolecafe.com/.
****************
THE NEW WORLD ORDER
The New World Order is not a monolith; no single group of rich folks sits together in one room debating our planetary future. It is, quite literally, a new order in which world power aggregates along geographic/geologic lines, forcing regions to become players against each other and running roughshod over the nationalist sentiments of their subject populations. The regions are Europe (including Britain), Asia, South America and North America. Woe to those nations who are stuck in between. In spite of Sino-Japanese tension, Japan, China and South Korea have urged the creation of a Free Trade agreement to cover the Western Pacific. Geography and money will prove to be the ultimate trump cards because geography is governing economic decision-making. There may be a war between China and Japan but ultimately Japan (like the UK vis-a-vis Europe) will find itself swallowed into regional hegemony, either as a winner or as a loser.
Take a look at Orwell's 1984 again. It is a wonder how he saw so much. Yet behind all of this realignment, enormous streams of wealth or capital are being expended and - most importantly - transferred behind the scenes. The people controlling that money are not seeing their control dissipate as the nation-states vanish. Money makes its own rules.
Profits were made during the cold war by continuing the controlled escalation of tensions between the superpowers while secretly preventing those tensions from reaching critically dangerous levels. The major players included Armand Hammer, the Rothschilds, the Bushes, Averill Harriman, inter alia.
These people always find ways to eke profits from a system that is in meltdown. They make money on the way up. They make money on the way down. Their appalling justification, their pact with the devil that makes this all possible, is that "As long as we're making money then everything must be OK." This is what the real PTB (Powers That Be) believe. This is the final distilled definition of "the bottom line".
The problem lies in the definition of "The Powers That Be." Most people still think in terms of nation states. I always think in terms of money, even to the point of looking at money (the way it functions now) as the PTB without attachment to a human or national identity.
Not too long ago I had a dialogue with Catherine Austin Fitts after which an epiphany struck. As the human race blows itself into extinction, or destroys the climate, or starves itself to death, the last corporate merger and acquisition will take place. And at the same moment as mankind dies, the CFO of "GlobalCorp" will be shouting, "Hooray! We did it!"
Those who win in a rigged game get stupid. We have all played this game (to one degree or another). And compared to the rational, far-sighted humanitarians that Jefferson and Whitman hoped for and expected, we are all frightfully stupid.
In spite of all the warning signs that demand and energy use must be curbed immediately, the only commercial effect of Peak Oil has been to increase consumption as much as possible - so as to get as much "money" as possible, as quickly as possible. This before the instant, possibly only months away, when money - because of a lack of energy - becomes valueless. Solutions that should enable a reduction in oil consumption are only functioning as an insane rationale for using more. The pity of this utterly unnecessary disaster is matched only by the arrogance that created it.
With unmistakable desperation, China, the US, Russia, Europe and the Middle East are fiercely jockeying for a measly 40 billion barrels of Caspian heavy-sour oil instead of the 350 billion we were promised by the major oil companies a decade ago. Caspian oil has some of the highest sulfur content on the planet. It is expensive and environmentally destructive to refine. The mountains of sulfur around the Caspian are now so large as to be visible from space. Do you not see the desperation here?
The only way to curb demand is to pull the plug on global economies, starting first with the already partially cannibalized US economy. Our manufacturing has been stolen or given away for "spare parts." So have our savings, our Constitution, our resources, our credit, our credibility, our confidence, our manufacturing base, our jobs; and soon our houses, our personal bank accounts and ultimately our hope. The United States is being liquidated after a fait accompli merger and acquisition.
The bottom line turns out to be the suicide of the human race as mergers and acquisitions lead to the final moment of malignant capitalism: "the last corporation standing."
GlobalCorp becomes Global corpse.
Hurray, we did it!
To look on the brighter side of this, my brother in arms Matt Savinar helped me to see the good in Peak Oil. He wrote, "When people ask me what is 'positive' about Peak Oil, I tell them (only half-jokingly) that: "well, if there is no collapse, we're all going to be chipped, tagged, drugged with FOX news being beamed into our brains while living in slums patrolled by robotic soldiers with strangely familiar Austrian accents."
The fire has begun.
****************
FOR THE RECORD - FTW REORGANIZATION PENDING
I wake up now on a daily basis knowing that at any moment the story might break signaling that the collapse has been triggered. It is my mandate to scan the horizon for signs of this, to help discern where the blows will fall, how hard, how quickly and where they will have the most impact. Effective immediately (and taking into account stories FTW has already committed to publish), it is imperative that FTW transform itself into an informational / intelligence lifeboat for those who are listening.
I will not be writing for FTW for a period of approximately two months while I complete a corporate reorganization that is necessary to adapt to the world as it is, not as we might wish it or pray for it to be.
FTW now has tens of thousands of daily readers who understand what is happening and who are urging me to stop trying to convince the rest of the world. They want us instead, try to and help those who are already convinced. We cannot save everyone. We can only help those who are asking for it. That is our constituency - our contract. The doors will always be open for latecomers.
What you will see in two months or less is a new FTW; focused, precise, and more useful on a day to day basis. If I lose support from progressives or activists for this, so be it. If FTW falls from grace with some for failing to be politically correct, then all I can say is "Good luck to you."
We must all do what we must do and do it now. My conscience is clear that I have done all that is possible to warn. When a tsunami is coming there is a point at which one must stop trying to warn the indifferent and just get out of the way and help others who are also trying to get out of the way. For those who now see this, FTW hopes to become at least a partial bridge to your safety. In order to do that, other bridges must be abandoned.
ENDNOTES
1. Fleckenstein, Bill; Prerequisite to current events: Bubble 101; MSN, Feb. 28, 2005.
2. McKillop, Andrew; Fundamentals in the oil-pricing game; http://www.vheadline.com; March 2, 2005.
3. Lundberg, Jan; The Global Nutcracker Called Peak Oil; EV World, Feb. 20 2005.
4. Detroit News editorial by Thomas Bray, February 27, 2005 quoting authors (and Neocon / Bush allies) Peter W. Huber and Mark P. Mills.
5. Crude oil prices may rise as output trails demand; Xinhuanet, February 28, 2005; www.chinaview.cn.
6. Auerback, Marshall; Last Orders for the US Dollar; www.prudentbear.com, March 1, 2005.
7. Ibid.
ENDS
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