Impending Crisis   

There are, absent fossil fuels, sustainable means to obtain clean water, nutritional food, appropriate clothing and shelter, but not in sufficient quantities to sustain the present population, let alone provide any excess. 

Nobody knows exactly what will happen. We have never seen a situation like this where the excesses have been so extreme. It is difficult to see how it will resolve itself. What is terrifying is that when you get excesses this bad you get results you can’t expect.

Highlights of what to expect:

-Oil extraction from wells will be physically unable to meet global demand

-Alternative energy sources will fall far short of compensating for expected shortages of oil. There is simply not enough time to convert over to them and all require an underlying fossil fuel platform.

-Disruptions to transportation and the economy are expected as the global decline of petroleum begins.

-Gradual, permanent cut-off of fuel for transport and for industrial machinery. Global trade will greatly decline.

-Food shortages; agrobusinesses would not be able to operate without the supporting fossil fuels

-Resource scarcity; most products depend on fossil fuels

-Reduction of virtually all business and government activity and very serious unemployment

-Social unrest

-Resource wars

Dr. Smalley, in the February 2005 issue of Discover magazine gave the following prognosis as a result of the energy shortage brought on by peak oil and the fact that the world cannot produce oil as fast as the world's growing economies demand it:

“There will be inflation as billions of people compete for insufficient resources. There will be famine. There will be terrorism and war.''

Economic Collapse

Oil is the fuel that enabled the growth of modern civilization, and all industrialized countries now rely on it to an extraordinary extent. Oil provides 40 percent of all primary energy, and 90 percent of our transportation energy. It is furthermore critical to industrial agriculture, the chemical and pharmaceutical industries, much of the clothing industry, and a vast array of others. The physical and chemical versatility of oil, combined with its high energy density, are such that no other known energy source can serve as a full or even adequate substitute. In short, oil is the lifeblood of the industrial world. 

The chief economist of Morgan Stanley predicted in 2005 that we have a 90 percent chance of facing ‘economic Armageddon’.

Rising Oil Prices

The inexorable tightening of supply is destabilizing oil markets, which now exhibit extreme price responses to the smallest of disturbances. Higher oil prices are hurting economies by increasing the cost of consumer goods while simultaneously reducing disposable income. Sharply rising oil prices have always preceded economic recession and plummeting stocks.

Analysts predict that market-based panic will drive prices skyward.  And as supplies can no longer slack daily world demand, the market will become paralysed at prices too high for the wheels of economy and even daily living in 'advanced’ societies”. No region in the world would be able to rely on distant energy supplies and they would have to fall back on their own resources.

One economic aspect of oil is that its demand is very price inelastic in the short term, meaning that it would require a large price increase to cause a significant reduction in demand. Prices at the pumps in the USA have almost doubled in recent times, yet gas-guzzling Hummers and other SUV’s are still purchased like there is no tomorrow. Industry experts say massive effects on behaviour will only happen if supplies are disrupted or prices hit $5-a-gallon.

Another complication is that in the more developed countries the services industry has replaced much of their traditional oil dependent industries. This is why I don’t believe that the oil prices will stop at $100 a barrel, like some financial experts predict. In the short term, they would probably have to increase in excess of 300% or so to have the desired effect. This uptrend would then eventually be (temporarily) interrupted by slowing economic growth and from efforts of conservation.

Inflation

Rising energy prices would spur overall price increases, causing inflation. Energy costs will then become an increasingly bigger part of the economy, and the same % increase in oil prices that once had a negligible economic effect will suddenly be significant. At the same time, higher prices will cause a fall in demand and a stagnating economy. This is called ‘stagflation’ and is exactly what happened during the 1973 oil crisis.

Debt in many countries like the USA and the United Kingdom are at record levels, and strong economic growth then becomes essential. Falling home prices would threaten the foundations of those economies. Therefore, efforts to curb inflation by raising interest rates would hit house prices, which in a leveraged economy would cause a devastating downward spiral, pulling down businesses, consumers and banks. Policymakers will therefore be powerless to fight inflation that will then soon become widespread. Prices of food and manufactured goods will shoot up.

Depression

The world will first enter a recession followed by a very deep Depression that may well be greater than the 1930’s Great Depression. Stock markets may plunge, businesses will go bankrupt and huge job losses will follow. Eventually, economic growth will cease or continue only in a few places at the expense of other places. The economic stress among almost all nations, advanced and developing, rich and poor will be considerable and is certain to lead to increasingly desperate competition for diminishing supplies of oil. The world will become a larger place again with less and less globalism.

Resource Wars

Many countries have become heavily reliant on Middle Eastern oil, and the geopolitical stakes of conflicts in this region have risen to all-time highs.

Indeed, the worst case scenarios are terrifying: genocide on a scale never before seen, as control of the remaining oil divides along racial, ethnic and national boundaries. Even the best-case scenarios, all of which require unprecedented levels of international cooperation, political courage and public participation, offer grim life-and-death choices. (Richard Heinberg)

So far, only the United States have ventured into the Middle East. But what is to stop China from continuing into Iran, Iraq and even Saudi Arabia as China will be energy starved in the foreseeable future. A military contest over oil could eventually spread war from the Middle East to Southeast Asia, and it could leave the oil production infrastructure of many countries severely damaged in the process. Such a conflict may be the Third World War.

Some Latin American countries may find themselves combatants in their own oil wars. Australia and New Zealand may fall victim to desperate Chinese adventuring or to anarchy emanating from Southeast Asia.

Social Chaos & Dark Ages

The European fuel protests of 2000 were an excellent example of what will happen when we are deprived of our the fuel powering our artificial lives. The implications of just this minor shortage caused by blockades of fuel depots was tremendous. Naturally, there were huge lines at petrol stations to refuel, but there was also panic buying at the shops. Some ran out of bread and milk. Postal collections were suspended on Sundays to conserve fuel. Farm animals were threatened with starvation because the feed was unable to be delivered. Schools closed down and hospitals cancelled all but emergency operations. And all this from two and a half weeks. Similar events happened in the USA during the 1973 Oil Embargo.

The impending fuel crisis will be permanent though and the trucks will no longer pull into the Wal-Marts or supermarkets.  The freighters bringing cheap and disposable household products 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.''

When worldwide oil production starts to decline considerably, countries will be competing aggressively for fossil fuels as  difficulties will start with even keeping electricity plants running.

The blackouts that hit the eastern USA and Canada in August 2003, and the lesser failure that hit London’s Underground system shortly afterwards shows the how totally dependent we are on electricity power and the dramatic effects that its absence causes. 

Reduced food supplies will also comprise immune systems and set up refugee camps will lead to diseases. New strains of the age-old human enemies such as tuberculosis, malaria, cholera and others will be on hand while vaccines will be ineffective and out of reach.

Food

It may come as a surprise to many that the world’s industrial food supply system is one of the biggest consumers of fossil fuels. Vast amounts of oil and gas are used as raw materials and energy in the manufacture of fertilizers, herbicides and pesticides and as cheap and readily available energy at all stages of food production. Fossil fuels are also essential in the construction and the repair of equipment and infrastructure needed to facilitate this industry, including farm machinery, processing facilities, storage, ships, trucks and roads. Just consider that currently agriculture accounts for 17% of the US annual energy budget.

	Perhaps the Amish got it right afterall

Industrial, green revolution-style agriculture is particularly energy intensive. Every calorie of food produced today requires between 10-16 calories of hydrocarbon energy (from planting, irrigation, feeding and harvesting, through to processing, distribution and packaging). This style of agriculture increased world grain production by 250%, and was almost entirely attributable to fossil fuel input.

Food production will become a problem of extreme urgency

Modern agriculture is merely a way of converting petroleum into food. Without energy, food supplies decrease and the current world population of 6+ billion has no hope whatsoever of sustaining itself at current levels.

It has been estimated that, without hydrocarbons to provide energy, fertilizers and pesticides, agriculture could not support a population greater than two billion. This reduction would take us back to pre-20th century levels but the disruption to society and its infrastructure would probably mean a reversion to pre-industrial revolution.

The example of North Korea shows us what happens to agriculture when oil products are removed. After the Korean war, it had developed a modern farming system depending on machinery and oil-based fertilizers. After the Soviet Union fell, Communist aid to the country stopped and they were unable to purchase oil and supplies. Without oil, farm machinery was sitting idle and large proportions of the people had to return to the agriculture. Unfortunately the soil had been drained of nutrients over the years and, without fertilizers, it was unable to produce the same output as before. Crop yields fell by 60% over the period 1989-1998. US congressmen and others who have visited North Korea tell stories of people eating grass and bark. Other reports talk of soldiers who are nothing more than skin and bones. Throughout the country, there is starvation to rival the worst found in Africa. Chronic malnutrition has reached the point where many of the effects are irreversible. Unless it can get access to oil and fertilizers again, the population will decline until it reaches a sustainable level and civilization will be faced with the delicate task of determining who survives. The history of North-Korea (DPRK) demonstrates how an energy crisis in an industrialized nation can lead to complete systemic breakdown

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