War is continuation of Politics by other means – Carl von Clausewitz, 1816
War is continuation of Politics and Economics by other means – Mike Ruppert, 2009
Oil on earth is ending, each one of us knows, yes but what if it finishes sometime in next 15 years? Worry? Panic? Chaos? Ablution? Solution?
Allow me to show you a little picture. Every morning someone in say Delhi has his breakfast with nice aloo parantha. How did he get one? Let’s talk of the process. Wheat growing is agriculture where an Oil powered machine plows the fields, planting is done by an automatic oil driven planter, irrigation is done by using pumps (using oil/electricity), fertilizers of Ammonium Nitrate made from Ammonia (whose feedstock is oil) are sprayed, pesticides made of petroleum are administered. And once crop is ready the entire process of harvesting, transporting, processing and packing is done. (Each one of them using oil and its products – all plastics, machine fuels, gensets for electricity)
So seemingly, oil has made our lives a lot simpler and thus paced up the rate of development we have. Thanks to it, the population, all over the world has grown over the centuries exponentially. Check out the following graph of human population.
It is no surprise that this has been due to a more accessible source of energies – coal and crude oil. In 1712 with the invention of Steam engine run on coal by Thomas Newcomen, the Industrial Revolution got a new and upgraded lease of life. On January 10, 1901, the discovery of a huge oil reservoir on Spindletop, Beaumont, Texas created a race of energy. Until then whatever oil was known was refined to create kerosene for lamps. Now it would create entire economies. Insofar that pace of development brought by oil exploded the population that grew from 0.2 to 1 billion in 1800 years to 7 billion in next 200 years! And it looks like we don’t have a finite ceiling to that because UN forecasted a stable value of 10.5 billion only by year 2062.
On the other hand, Oil as we knew it till today is ending, but worryingly at a rate none of us knows or is prepared to handle. Enter Peak Oil.
For any product of finite availability, there would be a time till when its production would increase till a particular value. Beyond it, no matter how much money or resources you invest in its production process, it won’t increase, because well it is declining and most of it is used up. It is logical to go down. That has what has happened with Oil. The middle point of curve of max production is Peak Oil. And the enthralling part is that we passed Peak Oil in 2006!
This graph explains that almost 60 countries of world producing oil have crossed their Peak Oil point. Of all the data that Energy administration departments all around the world throw, the max production level of 85.6 million barrels/day was reached in 2007 and never again, in a situation when EIA reported in 2009 that world oil demand is set to rise 21% from 2007 to 2030. We are at a situation in the world where in pursuit of infinite growth we have hit the ceiling against a limited amount of energy to throw money at and use up. And on top of it our economic systems designed on fiat currency and fractional reserve systems have made us dependent on banks for every single thing we do, from our salaries to expending our savings. That actually hides the real scenario of oil from the financial markets.
Modern Geopolitics is the fruit of a shrub nurtured with oil. The international geopolitics revolves around gaining a strategic advantage to access newer fields of oil. The rush is to exploit the cheapest ones because once the wells run dry the cost to find newer ones will be galactic. In brief this theory explains a lot about USAs strength in modern day geopolitics. It is the biggest consumer of oil and had been the biggest producer till 1950s. Its relations with Gulf nations are only alive till Gulf has oil. Saudi Arabia having 25% of the known world’s reserves maintains constantly that it isn’t anywhere near the peak oil. On the contrary it has started off shore drilling despite that fact that it costs 10 to 50 times more cost than drilling onshore. Obviously the easy access wells have been exploited and there is a peak of oil. But they can’t declare it for the reason that the Arab population has been fed on the premise that oil is the key to their progress. The situation in the country is highly complex and declaring that more than half of their oil is over, will call a revolution, endangering the reserves. No country would want a disturbance since there is no known replacement for this 25%. A few more observations are Russia’s lack of support to Global Climate conventions because warming will create access to Siberian permafrost regions which have enormous oil deposits and also will open a new trade route for Russia to East and South Asia which are the new economic powerhouses in the offing.
This is the Energy Scenario we face today. But the things are not as grim as they seem. Alternative energy technologies are being developed to take place of crude oil. Solar, Wind, Hydrogen, Bio-Fuels, Shale gas, Geothermal, Tidal etc all have their advantages and disadvantages of which to date we don’t have a single reliable access technology. Detailing the energy sector advancements is another topic in itself and I would digress.
Still talking of India’s efforts towards the shift have been exemplary though not top of the line. The initiative to exploit Shale gas as automotive fuel in form of CNG, PNG and LNG is a very good step. Although Shale gas reserves won’t take place of Oil because we don’t have a well laid out delivery structure for gas. When part of India’s population is still waiting to get access to electricity and are still dependent on fuel wood, biomass for energy, Oil would be a far cry for them. Our major consumption is imported and we burn 8 billion USD per year to buy Oil. But since we have world class refineries like ONGC, GAIL, etc to create ready petroleum products, they incur back the revenue of 5 billion USD by supplying other nations.
As to conclude I would mention Charles Darwin. Darwinism says an organism that adjusts to the nature the best will survive and the others will hit an evolutionary dead end. Social Darwinism hence says, if you are in a group and a bear attacks, you don’t have to be the fastest runner, you just have to be faster than the slowest one. All our advancements to date have been related to energy: from coal blocks, to steam, to industrial revolution, to automation, to modern technologies now. And if this energy ends, we end too. The basic law that governs bacteria growth in a petri dish or even stock markets for that matter says, “Something that grows by that rate would have an equally sharp fall (History of every bubble)”. And the bubble this time is the Human population. The shock of energy crisis is coming this is definite. It won’t come in a day, it would come slow, but when and how long it will be till we have a post-crisis order arranged in the world, nobody knows. This is the Black Paradigm
References: The End of Oil: Paul Roberts
Collapse (Movie): http://www.youtube.com/watch?v=JeufX6S-Q_s
(Trailer): http://youtu.be/WAyHIOg5aHk
The Thought Spout 