The S***t hits the fan

Peak Oil has been discussed on-line for quite some time, but while you are reading this, the thing is actually happening. A number of countries dependent on oil-imports headed by the US were so worried about the effect of high pill prices on the economy that they have decided to tap their emergency oil reserve to the market in order to lower prices by political intervention. Prices have, of course, fell, and as could be predicted, another group of countries dependent on oil-exports, OPEC - Saudi Arabia are obviously infuriated. Such a development is almost sure to have geopolitical consequences, but I predict that it will not be the winner of this battle, but the country that first breaks it dependence on oil that will be the next world leader.





The Reuters article I link to above somehow manages to discuss the event in economical and political terms without even mentioning peak oil - in spite of acknowledging the fact that meager oil reserves makes oil more expensive in an article 13/06. Nor does it mention climate change, even though writing about the topic 18/06, and the common sense knowledge that if we use all oil there is on earth, we will render the planet inhabitable. With peak oil and climate change in mind, high oil prices are hardly a problem. It might slow down economies, but it will

• a) make oil reserves last longer and
• b) make climate friendly alternatives to oil more profitable.

Reuters is a praiseworthy news source, writing for a specific set of readers - the international business community. They sense danger when politicians try to manipulate commodity markets in this way, and with good reason so. This is but one sign of the fact that free market liberalism is a dieing ideology. It has never been more than an ideology, and as such it should serve the needs of the ruling elite. Power is based on more or less content consumers, and when the ideology of free markets can not generate that, elites will discard with the ideology, not with their power. Technically, one could argue that since the consumer countries have paid for these reserves they are free to do what they want with them, but that is beside the point, since states have pledged to abstain from this kind of action, even though they always have had the opportunity.

Since the move is headed by president Obama, republican politicians in the US are also protesting about that they see as an unwise use of reserves. It is hard to imagine that a party based on "drill, baby drill", would have behaved more wisely if they were in power, and Obama would probably face even fiercer resistance if he tried to limit co2 emissions or prepare the US for Peak Oil, but the republicans nevertheless find themselves in the right on this issue.

Oil prices are high, but they have so far not made people in the west starve, even though they have aggravated poverty in the south. On the other hand, oil prices might be more likely to push people into self-sufficiency in the south, and thus improve their position. We know that more business as usual would have fatal consequence for all, so what is the sense in using the reserves now, and not when we really need them? And what is the sense in going into a conflict with oil producing countries? It is plain logic that OPEC will retaliate, but they are probably wise enough to do when they reckon that the consumer countries have used up their reserves. Then it will really be the seller's market, and the consuming countries would not come out as winners of such a conflict. At least not without going to war, so we could expect more Iraq/Afghanistan-like action in oil producing countries in the decades to come.

The shit has now hit the fan. Peak oil has made oil prices rice to the point where they pose a political problem, and elites are getting desperate. Especially so since nuclear power is less attractive after Fukushima, as Reuters points out. Maybe so, but I think many politicians will see no good alternative to nuclear power in the years ahead. Because oil prices will never return to the levels that keep America going.

Nuclear power, however, is vulnerable to peak oil in the same way as food is. We do not eat oil, but the price of oil affects the price of food since agriculture is motorized and food must be transported. Nuclear power is a highly centralized way of creating electricity, and as such it requires a lot of oil to run. The mining of uranium is motorized, and also uranium must be transported at a price that is determined by the oil price. The only way to create cheap nuclear energy for the consumer is to subsidize it, and the nuclear industry is already today heavily subsidized. But those subsidizes must come from somewhere, i.e. from the consumers tax bill. It seems this is an equation without solutions for the modern state, something that can be moderated in the short run but will be fatal in the long. What we are looking at is a civilization in decline.

And what are politicians so desperate about? As I wrote before, if the concern was the wellbeing of people, it would make a lot more sense to save as much oil as possible for later, or preferable stop using oil at all, starting tomorrow. What is at stake is not peoples lives, but companies' profits. Obama and the pack are desperate about keeping up GNP numbers, and other statistics on the macro level until the next crash. They are buying time, and pay with our future. As they always do.

What I wonder is which country will be the first to make a brave move and try out the obvious alternative: to dismantle centralized systems and let local communities supply food and energy for themselves, using oil, wind- nuclear power, donkey charts, bicycles or whatever they find suitable. That country will not look like the states we know of today, but it will be the powerhouse of the 21th century.


The S***t hits the fan

Peak Oil has been discussed on-line for quite some time, but while you are reading this, the thing is actually happening. A number of countries dependent on oil-imports headed by the US were so worried about the effect of high pill prices on the economy that they have decided to release their emergency stocks to the market in order to lower prices by political intervention. Prices have, of course, fell, and as could be predicted, another group of countries dependent on oil-exports, OPEC - Saudi Arabia are obviously infuriated. Such a development is almost sure to have geopolitical consequences, but I predict that it will not be the winner of this battle, but the country that first breaks it dependence on oil that will be the next world leader.

The Reuters article I link to above somehow manages to discuss the event in economical and political terms without even mentioning peak oil - in spite of acknowledging the fact that meager oil reserves makes oil more expensive in an article 13/06. Nor does it mention climate change, even though writing about the topic 18/06, and the common sense knowledge that if we use all oil there is on earth, we will render the planet inhabitable. With peak oil and climate change in mind, high oil prices are hardly a problem. It might slow down economies, but it will

• a) make oil reserves last longer and
• b) make climate friendly alternatives to oil more profitable.

Reuters is a praiseworthy news source, writing for a specific set of readers - the international business community. They sense danger when politicians try to manipulate commodity markets in this way, and with good reason so. This is but one sign of the fact that free market liberalism is a dieing ideology. It has never been more than an ideology, and as such it should serve the needs of the ruling elite. Power is based on more or less content consumers, and when the ideology of free markets can not generate that, elites will discard with the ideology, not with their power. Technically, one could argue that since the consumer countries have paid for these reserves they are free to do what they want with them, but that is beside the point, since states have pledged to abstain from this kind of action, even though they always have had the opportunity.

Since the move is headed by president Obama, republican politicians in the US are also protesting about that they see as an unwise use of reserves. It is hard to imagine that a party based on "drill, baby drill", would have behaved more wisely if they were in power, and Obama would probably face even fiercer resistance if he tried to limit co2 emissions or prepare the US for Peak Oil, but the republicans nevertheless find themselves in the right on this issue.

Oil prices are high, but they have so far not made people in the west starve, even though they have aggravated poverty in the south. On the other hand, oil prices might be more likely to push people into self-sufficiency in the south, and thus improve their position. We know that more business as usual would have fatal consequence for all, so what is the sense in using the reserves now, and not when we really need them? And what is the sense in going into a conflict with oil producing countries? It is plain logic that OPEC will retaliate, but they are probably wise enough to do when they reckon that the consumer countries have used up their reserves. Then it will really be the seller's market, and the consuming countries would not come out as winners of such a conflict. At least not without going to war, so we could expect more Iraq/Afghanistan-like action in oil producing countries in the decades to come.

The shit has now hit the fan. Peak oil has made oil prices rice to the point where they pose a political problem, and elites are getting desperate. Especially so since nuclear power is less attractive after Fukushima, as Reuters points out. Maybe so, but I think many politicians will see no good alternative to nuclear power in the years ahead. Because oil prices will never return to the levels that keep America going.

Nuclear power, however, is vulnerable to peak oil in the same way as food is. We do not eat oil, but the price of oil affects the price of food since agriculture is motorized and food must be transported. Nuclear power is a highly centralized way of creating electricity, and as such it requires a lot of oil to run. The mining of uranium is motorized, and also uranium must be transported at a price that is determined by the oil price. The only way to create cheap nuclear energy for the consumer is to subsidize it, and the nuclear industry is already today heavily subsidized. But those subsidizes must come from somewhere, i.e. from the consumers tax bill. It seems this is an equation without solutions for the modern state, something that can be moderated in the short run but will be fatal in the long. What we are looking at is a civilization in decline.

And what are politicians so desperate about? As I wrote before, if the concern was the wellbeing of people, it would make a lot more sense to save as much oil as possible for later, or preferable stop using oil at all, starting tomorrow. What is at stake is not peoples lives, but companies' profits. Obama and the pack are desperate about keeping up GNP numbers, and other statistics on the macro level until the next crash. They are buying time, and pay with our future. As they always do.

What I wonder is which country will be the first to make a brave move and try out the obvious alternative: to dismantle centralized systems and let local communities supply food and energy for themselves, using oil, wind- nuclear power, donkey charts, bicycles or whatever they find suitable. That country will not look like the states we know of today, but it will be the powerhouse of the 21th century.