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Energy crisis: Turning-point of humanity

03 July, 2008

By Rudo de Ruijter


After more than 150 years of increasing availability of energy and an explosive growth of the world population, we are now entering an era of always decreasing availability of energy. The world population will shrink. For this new era new economic principles are needed to maintain prosperity. Part of this is a bank-reform, that members of Parliament can compel if they want.

 

The oil-price rises explosivily. This time it is not about some action of OPEC, a threat of war or a cold winter. Today's rises in price are the result of a turning-point in the oil supply. Demand keeps growing and the oil extraction has reached its ceiling. And, as the oil exporting countries use more and more oil themselves, less oil is offered on the export-markets.

Those who count on alternative energy sources are wrong. Gas, coal, nuclear, hydro, wind and solar energy cannot make up the shortage of oil. The world population will have to do with less energy. .

Today's mix of energy use consists of  36 percent oil, 24 percent gas, 28 percent coal, 6 percent nuclear, 6 percent hydro-power and 1 percent renewables, like wind and solar energy.

The Canadian researcher Paul Chefurka has made an analysis and a prognosis of each energy source. See the pictures left and beneath. For explanation and details, please read his article World Energy and Population [1] http://www.courtfool.info/en_World_Energy_and_Population.htm

Most big oil fields in the world are "empty" now or slowing down. (Peak-oil.) For the extraction from the remaining smaller fields a lot more investments are needed and the extraction speed is lower. The lowering capacity can only partly be compensated by other sources of energy.

The peak in gas extraction is expected within a relative short time. The richest coal (anthracite) is depleted for the most part. The remaining coal is poorer in energy and demands higher extraction cost. Coal has a high CO2 emanation, and solutions to this problem are still in an experimental stage. The capacity of existing and planned nuclear plants is far to small to compensate the fall in energy. A rapid making-up of  arrears cannot be expected with nuclear plants. For hydro-energy the interesting locations are already in use and, here too, a multiplication of capacity cannot be expected. Renewable energy, like wind and solar, hardly represent anything compared with global energy consumption. In spite of hopeful developments, its share will remain insignificant for still a long time.[1]

World population

The explosive growth of the world population has been possible by the one-time consumption of fossil energy. We now have reached the top of the energy-extraction. The extraction of the remainder demands more cost and efforts for a lower output.

The lowering availability of energy will logically lead to a shrinking world population.

Big differences per country

The world population consumes in average 1.8 TOE (Tons of Oil Equivalence) per person per year. The use of energy in the world varies a lot. The 2.8 billion people in China, India, Pakistan and Bangladesh consume 0.8 TOE per person per year. In the US this is 8 TOE per person per year.

If we take a look at the dependency on energy-import, we notice that, calculated per inhabitant, Western European countries, Japan and the United States import more than 2 TOE per year (numbers from 2005).

When there are shortages on the energy export-markets, those countries are in trouble first. In this situation the US has the advantage that most energy is still traded in dollars. Financially they can dispose of it freely (by inflation and growth of the external debt) [3]

The role of the other energy-importing countries is double. On the one hand their demand for dollars helps to keep the dollar rate upright (and with the dollar rate, the US-imperium). On the other hand, most often they are also military allies of the US, who likewise profit of the submission of Iraq [3] and the occupation of Afghanistan. [4]

Oil applications

Today's oil crisis makes it painfully clear, that various forms of energy cannot be exchanged easily. Oil is made into diesel oil and fuel (70 percent), petrol/gasoline (13 percent), bitumen, lubricating oil, kerosene, butane, liquid petrol gas, naphtha, benzene and toluene.

From these, naphtha, benzene and toluene are the raw materials for chemicals, plastics, synthetic fibers and rubbers.

Chemicals are in cleaning products, medicins, anti-freeze, paints, insecticides, fertilizers, soap and explosives. Plastics are used in bags, beer-cases, suit-cases, dustbins, dashboards, pipes, gutters, tubes, floor-coverings and polystyrene. Synthetic fibers and rubbers are made into textiles, silicons and tyres. [5]

All those products have their places in our daily life and most of them cannot simply be exchanged by others.

Transport and cohesion

Everywhere in the world the massive availability of diesel and petrol has determined the organization and cohesion of societies. Distances to be covered, considered normal unto now, will become very expensive, particularly in food-supply, commuting, trade and industry. In social life too, short distances will become more and more important.

Food and energy

The modern high-output food production swallows a lot of energy. In the US the production of 1 unit of energy in food demands 1.56 unit of fossil energy. When we also take into account transportation, processing, packaging, distribution, conservation and cooking, 1 unit of energy in food demands not less than 7.36 units of fossil energy. [6] The biggest threat for the intensive agriculture in 2008 is the doubling of the price of fertilizers, as a result of the oil-crisis. [7] Products of high-output agriculture will become too expensive for a large part of the world population. The biggest economy in energy can be made with traditionally produced food from farmers in the neighbourhood.

Continuing is war

With the present size of the world population it is quite certain, that there will not be enough food and energy in the coming 75 years. If the world population does not shrink radically and the strive for economic growth is not banned, more and more of our children will be sent to war to get more food and energy. (Of course these wars will be camouflaged as peace-keeping operations, development aid, democratisations and anything else the leaders of industrialized countries come up with to avoid the nasty taste of murder and robbery to their people.)

Growth-model

The always increasing availability of energy did not only allow an explosive growth of the population, but also came with economic models that function according to the principal of endless economic growth. They assume an always increasing availability of raw materials, energy, working force and consumers.

These models dominate the thinking of politics and economy in most countries of the world. The motor in these models is the money-system, that, by a permanent inflation, forces to more and more activity to forestall impoverishment. [2]

Although the decrease in available energy has already started on the export markets, we still don't have solutions for our economy - except warfare. For the moment there is a lack of consciousness, knowledge and comprehension.

Slimming-model

During our lifetime we never knew anything else but the growth model. That is in use nearly everywhere in the world. That is why we do not realize sufficiently, it is just an economic model. It only applies in a situation of permanent increase of energy, raw materials, working force and consumers.

When the economy must function with a shrinking availability of energy, we need another economic model.

In the slimming model there is a shrinking production and a shrinking consumption, caused by the decrease of energy. When there is less energy available than needed for a big population, we should - logically - strive for a smaller population. If we start the decrease in population early enough, then, counted per inhabitant, prosperity can be maintained at a high level. (When the population is too big, it will be war and economic crisis.)

Bank-reform

In today's system new money is created by commercial banks each time loans are made. For all commercial banks together, there is not a single limit in the unbridled money-creation. It can, at best, be stimulated or slowed down a bit by the interest rate of the central bank. Central banks themselves profit from inflation and changing interest rates, which allow them income from monetary operations, that garantee their independence. [2]

This system of permanent inflation should be replaced. The money creation should be limited to the central bank. Today's banks would become middlemen, who hand the loans to their customers. For these customers nothing changes. Their bank accounts continue in the same way.

By removing the permission to create money from the commercial banks and put this right exclusively in the hands of the central bank, the latter can immediately stop the inflation.

Consequently the central bank doses carefully the amount of money in circulation, in order to prevent any devaluation of the money unit.

In accordance with the government, different interest rates can be used for different categories of loans. This way, for instance, long term investments for a sustainable society can be financed prioritarily, or, the other way around, unwanted investments can be discouraged. In this way a slimming model in a situation of decreasing population can provide maintenance of prosperity.

Note, that in countries where there is still an increasing availability of energy, the bank-reform lined out above offers a better structure for sustained prosperity too. By the differentiation of interest rates, long term investments for a sustainable future can be financed and, also, investments can be stimulated or discouraged by sector. Further more the excesses in money creation can be stopped immediately and prevented in the future.

There is no obligation to apply this reform in several or all countries at the same time. Probably, in many countries, the central bank has enough legal power to implement such a reform independently. In other countries some changes will have to be made in the laws.

Members of Parliament

During the last century some central banks have built a questionable reputation as regulator of the economy. And some central banks are still haunted by the neo-conservative ideas of Friedman. That is why it is not sure at all. that all central banks are inclined to such kind of reform.

In most countries their power is based on just a few articles of law. These articles qualify their authority. When governments want, they can withdraw these articles and put the creation of money in the hands of the state. (Opponents will say, the governments will make a mess of it. I think, that the financial crisis has sufficiently proven, that it is the commercial banks, who are making a mess of it.)

End.

Reader Comments:

Peak Oil Catastrophe

This is an excellent article. I have this to add. Global oil production is now declining, from 85 million barrels per day to 60 million barrels per day by 2015. At the same time demand will increase 14%. This is like a 45% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue until all recoverable oil is extracted. We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems. This is documented in a free 45 page report that can be downloaded and distributed/ emailed: http://www.peakoilassociates.com/POAnalysis.html

Clifford J. Wirth, United Kingdom - 03 July, 2008

Oil has Peaked

Oil peak and the War against Terror are interlinked. The ongoing moves of the lone super-power to neutralize the so called Weapons of Mass Destruction in the entire Middle East region is in fact, hopeless struggle to control the energy resources of the world.
"West would not stop until they control the energy resources of the world".
This was sternly stated by the then President of the US, Jimmy Carter, in his State of Union Address of April, 1977, continuing to add that,
"--- all efforts short of war were needed to find new sources of energy to survive".
He warned that, more energy was being used than discovered and early 80's would see the peaking of oil, meaning that, the downhill journey of oil based energy resources of the world would then start.

Not heeding to his advice, successive US governments continued to plunder, resulting in a situation which Carter wanted to avoid. That is, "efforts short of war" to find alternative sources of energy. Situation which developed in the ensuing years was exactly as foreseen and transformed into the first Gulf War, mystically sanctioned by Bush Sr. on 9/11, in 1990.

The trend continued and events of 9/11, Second Gulf War and the present War against Terror, are all links of the same chain. Iran and Iraq being the second and third largest oil producers in the Gulf, are, "Bull's-Eyes" for all Bush-Guns. With presently known oil reserves already peaked about two decades back and life of known reserves estimated to last not beyond next 20 to 25 years,( a contested estimate rejected by vested interests), situation is more desperate than anything for the US and allies. Imagine a single horrible scenario, when the entire oil based transportation system of the world( including air-travel) would completely become redundant due to extinction of fossil fuels.

In this desperate situation, the Allied have discovered a ray of hope in a huge oil deposit located below Caspian Sea, which has been indicated by remote sensing technology through satellites. But, the gateway to that oil fortune is located in Iran/Iraq and by extension, in Afghanistan/Pakistan. Therefore, all the stories being cooked of "weapons of mass destruction", first in Iraq and Iran,and now in Pakistan going to Talibanization, based upon which, the Allied are resorting to all-out efforts, crossing Jimmy Carter's modest limit which he had fixed at, "Short of War".
Our shortcomings are evident from the fact that, West is planning for its future, many decades in advance, while we are killing the future of our current generation by not attempting to cure even the ills of our society, which obscure the future of all generations to come. Under the circumstances, any attempts by the super-srtrong nations, towards ensuring economic survival of their future generations by all means, not caring for the sleeping Gulf, is better understood from the following excerpt from an article by Gheit.

"Nestled into the heart of the area of heaviest oil concentration in the world is Iraq, overflowing with low-hanging fruit. No permafrost, no deep water. Just giant pools of oil, right beneath the warm ground. This is fruit sagging so low, as it were, that it practically touches the ground under the weight of its ripeness.
Not only does Iraq have vast quantities of easily accessible oil, but its oil is almost untouched. "Think of Iraq as virgin territory .... This is bigger than anything Exxon is involved in currently .... It is the superstar of the future. That's why Iraq becomes the most sought-after real estate on the face of earth."

M.Saeed, Pakistan - 06 July, 2008

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