Doom Porn #2 - Collapse by Michael C. Ruppert

"Think for yourself"

The Energy Standard doesn't do regular doomish scenarios and gloom-doom-mongering, but doom-porn has it's uses. It forces us to think the unthinkable.

So, with that said, here's a link to Michael C. Ruppert interview movie by Chris Smith:

Disclose.tv - collapse an interview with michael ruppert 1of 6 Video

Click to follow to the site for the other pieces. And yes, consider buying, renting or loaning the movie and shaking up your friends and colleagues. It's great for stimulating conversation.

World oil peak / plateau delayed to 2020-2025?

What has been the effect of the financial crises and the consequent worldwide recession on world oil peak timing? The reasoning is that as the oil consumption has been marginally reduced due to worldwide recession and slow/fearful recovery, the amount of reserves saved has been considerable.

This saving of reserves and potential consumption capacity may be partially offset in time by the fact that a lot of new oil production projects have been postponed due to lack of funding and lousy economic prospects (i.e. lower price of oil and higher uncertainty).

So what is the overall effect of reduced consumption and postponed production?

There has been no thorough bottom-up studies of this, but in a recent interview (part 1, part 2) oil expert Michael R. Smith from Datamonitor (previously Energyfiles Ltd.) gave his guesstimate of things developing as we go forward:

"I feel the peak/plateau period is much delayed because of the recession. Currently I am looking at around 2020 - perhaps as late as 2025. But of course it is dependent on what happens to the global economy (and the environment) between now and then. When I first started forecasting in the late 1990s, I had a production plateau beginning around 2016. Over time, supplies got tighter and tighter and oil prices started to rise, and the plateau moved nearer to around 2012. Now it has moved out to 2020, showing how uncertain this modeling can be because so many technological, financial, political and social variables are at work. The fluctuation points to volatility of course which is a signal of tight energy supply. If there is a new surge in economic growth and China and India continue to grow and mop up oil supplies, then it will move back to 2016 very quickly." - Michael R. Smith of Energyfiles Ltd / Datamonitor, in an interview with ASPO USA, 8/2010 [emphasis added]

So there you have it. If we grow, the peak moves towards us quickly as demand grows.

If the world muddles along slowly, the peak could take another 10 years or more, but not a lot of new capacity would come forward and if oil prices stay relatively stable, neither would alternatives.

Also, the faster we ramp up the production/consumption, the faster the decline is likely to be.

So, fast evolving crisis in c. 2016 or slowly evolving adjustment in 2020+?

Certainly the latter, but everybody wants the economy to grow faster.

And if it does, another price crunch is just around the corner.

 

What is 21st century enlightenment (video)

Some positive thoughts for darkening times:

"Never doubt that a small group of thoughtful,

committed citizens can change the world.

Indeed, it is the only thing that ever has"

- Margaret Mead

Food = Energy

A Blast from the Blast - "Enough Energy to Melt Glaciers"

An Ad from LIFE magazine in 1962 (courtesy of Ms. Marx)

Summer reading

"As an Anglo European white guy from a very long line of white guys, I want to thank all the brown, black, yellow and red people for a marvelous three-century joy ride. During the past 300 years of the industrial age, as Europeans, and later as Americans, we have managed to consume infinitely more than we ever produced, thanks to colonialism, crooked deals with despotic potentates and good old gunboats and grapeshot. 

Yes, we have lived, and still live, extravagant lifestyles far above the rest of you. And so, my sincere thanks to all of you folks around the world working in sweatshops, or living on two bucks a day, even though you sit on vast oil deposits."

- Joe Bageant, "Waltzing at the Doomsday Ball"

Lloyd's insurance warns on Peak Oil

And so the chorus grows:

Lloyd's adds its voice to 'peak oil' warnings

"One of the City's most respected institutions has warned of "catastrophic consequences" for businesses that fail to prepare for a world of increasing oil scarcity and a lower carbon economy."

That's from the Guardian (UK).

The actual report released by Lloyd's of London in co-operation with Chatham house has more interesting snippets inside it.

• Businesses which prepare for Peak Oil transition will prosper - the rest will go down
• Low cost [liquid] fuels are gone
• Asia is now part of the global energy security mix
• Global oil supply crunch and price spike coming
• Energy infrastructure is vulnerable
• Just-in-time production/warehousing will have to adjust
• Big business opportunities in transition

This is the "easy oil is gone, but we will transition through a rough patch" type Sunday matinee scenario for the whole family. All the really disruptive parts are left out or between the lines.

Yet, some of the graphs are quite telling:

So much for that Middle East spare capacity...

$200USD barrel of oil by 2016, anyone?

Peak Oil risks + Financial risks + Climate Change risks = ?##%&&!!

So, finally the insurance market is ready to start taking into account the consequences of peak oil, even if the scenarios are quite cautious - almost optimistic.

Seeing the Future via advertising

A BP advertisement from 1999.

What does collapse of sovereign debt do to Oil prices?

Financial Historian, Niall Ferguson, talks about collapse of empires and fiscal crises:



And there's also a set of slides to go with the lecture:

FiscalCrises&ImperialCollapsesferguson201005

Now, considering that energy and commodities in general have become one of the biggest financial plays in the business, how do sovereign debt defaults alter this picture?

What happens in the investment world, when:

- countries can no longer grow the way they used to (i.e. consume less oil)
- more money escapes sovereign debt instruments and is looking for good profits (oil derivatives)

No easy answers here, but it does appear as a reasonable assumption that as markets try to discount the coming wave of defaults, more money will be flooding into commodity derivatives - at least as long as the music in the markets keeps playing.

And that possible mega-spike in commodity prices will be the final straw that breaks the back of the sovereign debt camel.

But before there, we still have this one extra round of deflation fighting to be dealt with. Hence, oil prices plummeting with almost everything else, except US government debt.

Once that is dealt with - with more printing - up we go.

Crack up Boom, anyone?

A Musical Interlude

We interrupt the regular transmission with a musical interlude.



Don't take Max Keiser too seriously though.