peak oil

Illustration adapted from original at http://www.lowbird.com/data/images/2008/02/george-w-bush.jpg

Uncharitable

I think you have all been most unappreciative of President Bush's achievements. Not just uncharitable but lacking in insight about the way the world works and what has to be done to maintain our way of life. President Bush has done a great job here in very difficult circumstances, and he does not get due credit.

The basics

Let's sketch the basics. We 1.5 billion in rich countries could not have anything like our affluent living standards, our good health standards, our security, indeed our cultural life if we were not getting far more than our fair share of the world's resources. We consume something like 17 times the per capita amount of things like oil that the poorest half of the world's people average. Now that doesn't happen automatically. It has to be organised, and that takes a lot of difficult work. Billions of poor people in the Third World would rather not see their resources and their own labour used to produce wealth to ship out to enrich the corporations and the supermarket shoppers in the rich countries.

Realpolitix

So the first task is to make sure they don't see the situation as illegitimate. This is fairly easily done by the economists who explain that the only and the right way for things to be produced and allocated is by allowing the market to make the decisions. Or course markets always let the rich take everything, because they can outbid the poor. If there's ever any grumbling about this the IMF, the World Bank and the WTO are on hand to let them know that if any government was silly enough to depart from sound market principles then they would get no loans, or assistance with their impossible debt, and they would be banned from exporting anything. They usually get the message and shape up.

Ah, but unfortunately there are always a few knucklehead governments and rebel groups which persist in wanting to devote their nation's resources directly to the improvement of their people's welfare rather than see them flow out to enrich others. These people often call themselves "nationalists" but of course we identify them as subversives, insurgents, communists and/or terrorists. They do things like cut oil pipelines, wage civil war, sell drugs, and try to depose legitimate governments, and cause refugees and famines. Nice people in orderly rich countries despair at these silly people who don't understand proper economics and seem to delight in beating each other up and disrupting sensible development.

Good old-fashioned approach

So from time to time we have to take on the burden of straightening things out, banging a few heads together, supporting the correct faction with money and arms and getting rid of "uncooperative" governments, so that peace can be restored under governments that will rule properly. Sometimes we have to act pretty decisively to restore order, in fact sometimes we have to smash the country to shreds and kill several hundred thousand people in the process, but as US Secretary of State Madeleine Albright said when our sanctions killed an estimated 500,000 people in Iraq, it's worth it.

More basics

Look, people at the supermarket checkout counter don't understand how serious the situation is. If we can't go on getting oil at the rate we have become accustomed to those shelves will be bare. The stuff's getting scarce now. The Chinese are after it; that's why they're supporting murderous regimes in Africa without asking any questions. Now you can't secure the stuff just by being nice and asking to buy some; you have to go after it strenuously and sometimes you have to throw a little weight around, or some other bastard will get it first. That's what geopolitics is about. It's dog eat dog and devil take the hindmost out there. Most wars in history have been about grabs for resources. That's what The Great game in central Asia has been about and is about now. We have to secure our oil fields and we have to get safe routes for those long pipelines to sea ports, through foreign countries, some of which don't like us much. We can't build them and we can't protect them unless we have military bases and unless we bribe or bully some of those regimes into doing what we want.

Securing the Empire

So can't you see that we had to take Iraq and Afghanistan. And what if Saddam had decided to stop trading oil in US dollars! GW and the team bit the bullet; they did what was necessary. And GW has been a great front man; he's taken the flak for a tough and dirty but crucial job. When everyone's criticising and you can't tell them what you are really doing its best if the mess looks like a mistake made by a buffoon.

Yes of course they were clumsy. In the past they have pulled off most of the coups and assassinations and invasions neatly and quietly - got rid of Noriega, Lumumba, the Sandinistas, put in the Shah, supported our kleptocrat Suharto in Indonesia for 30 years, eliminated deviance in Haiti and Grenada (especially important that, can't let the little ones get away with deviatingŠsets a bad example the rest might see they can follow)Šwith not a grumble at home. Mind you they did stuff up a bit on Cuba and Venezuela.

So yes they did miscalculate in Iraq and Afghanistan but securing the empire is a difficult job, and it's a vital job. You cannot live in the way you have become accustomed, let alone have the 3% p. growth you insist on, unless we go on getting control of most of the dwindling resources an that means running those countries to our benefit not theirs. George and the Neo-cons have done it for you, in difficult circumstances. I think their critics should just be a bit more understanding and appreciative. If you want to go on living with your too-big houses and your plasmas and your jet-away vacations just quit the backchat and support your empire and those who secure it for you.

Illustration:"The Mysterious Fast Breeder Reactor and her brood"

This 2,500 word article is an extract from a 5,687 word chapter, “Nuclear Fission power options,” in Sheila Newman, (Ed.) The Final Energy Crisis, (2nd Edition), Pluto Press, UK, 2008

Breeder-reactors:

Most reactors round the world use uranium. A breeder reactor must be started with enriched uranium or some fissile substitute.

During the operation of a conventional nuclear power station, some of the neutrons in the atomic pile are captured by its U238, converting it into fissionable material. This includes plutonium and other dangerously radioactive products. These products are increased in a breeder reactor. In conventional reactors, moderators slow the neutrons. By thus reducing each one's likelihood of becoming part of a converted U238 nucleus and increasing its chance of finding one of the already-fissionable U235 nuclei, moderators allow a natural uranium pile to support a slowly increasing chain reaction.[a]

The Fast Breeder reactor (FBR)

Without the moderator, the neutrons slow down less and the reactor becomes a ‘fast neutron reactor', often abbreviated to just ‘fast reactor', with a bias towards the U238 being converted. In a fast breeder the nuclear waste products which present such a problem in conventional reactors become more fuel. The aim is to make this a closed and remote controlled process.[b]

The first Fast Breeder Reactor (FBR) or Fast Neutron Reactor was built in the US in 1951 with a tiny output of 0.2MW (electricity) and operated until 1963, when it was succeeded by a 20MW (electricity) one, a 66 MW one, a 20MW one and “Fast Flux TF” which had a thermal output of 400 MW, from 1980-93. The UK had a 15MW(el) from 1959-1977 and then a 270MW one from 1974-94. France built her first in 1966 with an output of 40 MW (thermal), followed by Phenix in 1973 (250 MWe) (still in operation) and Superphenix 1in 1985-98 with an output of 1240MWe. Germany had one very small one with an output of 21MWe from 77- 91, India has one with an output of 40 MW (thermal), built in 1985; Japan’s Joyu with 140MW (thermal) was built in 1978. Monju (280 MWe) went from 1994-1996 and is currently closed. Kazakstan’s BN350 has been going since 1972 with an output of 135 MWe, half of which desalinates about 80,000 tons of water each year for the city of Aktau. Russia has had 3 FBRs: the first in 1959-1971 reopened in 1973; the second from 1979 produces 12 MWe, and the third, built in 1981, with an output of 600 MWe is the largest still running (with assistance from a US supervisory crew), but it has had a lot of problems with liquid sodium coolant and other leaks, involving long periods out of action. France’s Super Phoenix was the biggest in the world, but it was closed down due to safety problems associated with sodium leaks. Monju Fast Breeder in Japan was also closed due to safety concerns.

Significant commercial success seems to have been elusive so far but there are international ambitious plans for “Generation IV” FBRs of various designs, including thorium based ones. The low cost of uranium is often offered as an explanation for the failure of this technology to find the necessary finance to take it past the experimental stage. Design and research are materially and financially costly. [1]

Reasons that thorium breeder reactors are not being built:

Potentially thorium breeder-reactors would enable a process of converting all the 98.3 per cent of the natural uranium into radioactive substances which can maintain a sustained fission process in a chain reaction.

No-one is doing this yet.

One experimental thorium breeder reactor [2] exists in Kalpakkam in India, which is also the only place, where all three fissile types: U235, Pu 239 and Th 233 are burned.

You can read a lot about the bright future of plutonium seeded thorium breeder-reactors on the internet, for instance, Michael Anissimov’s “A Nuclear Reactor in Every Home” [3]. Conventional nuclear power stations now only use about 0.75 per cent of U235 and increase the radioactivity of what is left in the form of terrifyingly lethal contaminants known generally as the actinides. The problem of safe transport of fuels and waste that is presented in conventional nuclear power stations is likely to remain for as long as these power stations are productive. Breeder reactors would generate similar poisonous substances but they would also burn them up in a closed and remotely controlled cycle, in continuous production of lower grade materials which burn usefully for nuclear energy production. The waste problem would be considerably reduced even though some less long-lived wastes would still pose a storage problem.

So why aren’t they being built all over the place?

The potential of thorium breeder reactors is still unproven beyond the small experimental facility in India. There is concern that proving and building them would be very expensive. There are still fears that they may never work properly as units.

There is however growing support for a new paradigm of quasi-continuous self-renewing fission energy which would ‘eliminate’ dangerous wastes. Against this ideal is the contention that breeder reactors could still be used to create weapons grade plutonium. The rebuttal of this is that weapons plutonium requires enormously more expensive Separation Work Hours and is not useful or necessary for generating power and that fast-breeder reactors designed for power production would not lend themselves easily to this use. If weapons plutonium were wanted then weapons plutonium specific reactors much more suited to the task would be built.

Another reason you will read is that there is a looming shortage of plutonium. [4] Although when Russia and the US agreed to eliminate a lot of their nuclear weapons this made a lot of enriched uranium and plutonium available, much of it was snapped up by conventional reactors and nuclear submarines. Warheads became fuel for US atomic power stations. The weapons-grade plutonium is diluted to become non-explosive. Recycling it saves time and energy normally used for the enrichment process.

Another school says that no-one influential is likely to want to disturb the uranium investment market because it is so profitable, particularly in the light of impending petroleum and other fossil-fuel depletion. This factor, coupled with the legal and other set-up costs of fast breeder-reactors, makes sticking to conventional reactors and mixing weapons plutonium with yellowcake more economically viable in the short to medium term – pending running out of uranium and recycled waste, and possibly pending a perfected thorium breeder reactor.

Importantly, the reliability of conventional reactors with their established safety and legal frameworks and the comparative low cost of building new ones according to ‘tried and true’ models discourages investment in new designs of which the setting up would entail complex and fraught negotiation of new safety and legal frameworks.

The chief beneficiaries have a vested interest in maintaining an industry that reprocesses and sells spent uranium to countries which have conventional reactors but which do not have global approval to reprocess their own waste.

Uranium supply

If uranium-fueled nuclear were to expand from the 16 per cent of world electricity [5] it currently supplies, then diverse projections see uranium failing to meet demand by around 2040. With no nuclear expansion, at current use it might last into the beginning of the 22nd century. [6]

Still others have argued that there is too much uranium around to worry about thorium or other stuff.

Some more technical problems with thorium and fast breeder reactors:

The costs of developing nuclear power using thorium as fuel are increased by the engineering problems associated with the production, recycling, and containment of extremely radioactive isotopes. Far more shielding would be required than for plants currently operating, including ‘MOX’ plants, which use recycled uranium mixed with plutonium.

The thorium cycle includes the need to come to terms with exotic old and new artificial substances of extreme radioactivity. The substances include U-233, which is chemically separated from the irradiated thorium fuel, and always contains traces of U-232. U-232 itself has a 69 year half life but strong gamma emitting daughter products, including thallium-208 which has a very short half life. Recycled thorium itself contains alpha emitter Th-228, with a 2 year half life.

The weapons proliferation risk associated with thorium FBRs is partly based on fears that U-233 might be separated on its own. The reprocessing of thorium itself is still highly experimental. [7]

The technical problems associated with the commercial development of thorium breeder-reactors are so formidable, even on the scale of research possible in a country as large as India, that India could just drop its pursuit of thorium FBRs if it could obtain ready access to traded uranium.

Some political and commercial complications: India as the new FBR lab

There are currently delicate international negotiations proceeding with India, which offers a huge commercial market for uranium but has an interest in developing nuclear self-sufficiency based on its huge thorium reserves. India’s nuclear technology has developed independently due to being isolated through India’s having developed nuclear weapons too late (1974) for inclusion as an official Nuclear Weapons State under the Nuclear Non-Proliferation Treaty (NPT).

The NPT of 1970 accorded five countries: France, China, Russia, the United Kingdom and the United States the exclusive official status of Nuclear Weapons States based on their having reached that status prior to 1970. Of those five countries, all but the USA reprocess spent nuclear fuel. As well as having been excluded from this club, India has enduring differences with the NPT’s strategies for lowering risk. Historically it has preferred to support a global policy of universal disarmament initiatives. It claims to be very uneasy about China’s capabilities and not to be reassured by Pakistan’s expressions of potential support for the NPT.

India has thus proceeded in comparative isolation with a civil nuclear power program, planned from the 1950s, receiving little or no fuel or technological assistance from other countries.

Up through the late 1990s India’s nuclear power plants performed poorly with only 60 per cent capacity.

Dot-com revolution and Indian diaspora

The dot-com revolution of the 1990s saw a huge flow of Indian students and scientists into US universities, institutions and firms. With the dot-com crash many of them returned to India, bringing substantial technical knowledge with them. The scientific and technical community in India became very attractive for the global outsourcing of new scientific and technical developments. It is perhaps partly because of these social changes that capacity of its nuclear power plants improved markedly by 2001-02 to 85 per cent. [8]

As early as the 1950s India planned for a three-stage nuclear development program. Stage One was for U238 to be used in pressurised heavy water reactors (PHWRs). In Stage Two the plutonium generated by these PHWRs was to be deployed to run FBRs. This has so far only been done in a 13 Megawatt experimental small FBR at Kalpakkam. The planned FBRs were to use the plutonium mixed in a 70 per cent oxide (MOX-fuel) in its core within a fertile ‘blanket’ [9] of U233 and thorium232 which would be there to make the fuel in the core sustain fission. In Stage Three it was intended that the FBRs use thorium232 to produce U233 as fuel for the third stage reactors. [10] India currently has 12 nuclear power plants. The Department of Atomic Energy has government clearance to set up a 500 MW prototype of the ‘next-generation’ FBW at Kalpakkam, with the intention of commercially exploiting thorium for its major fuel supply.

Thorium supply

After Australia, India possesses the world’s largest reserves of thorium. Use of Indian thorium would make India independent of imported uranium including reprocessed spent uranium.

Peaceful Atomic Energy Cooperation negotiations

On 9 December 2006 US Congress passed the United States-India Peaceful Atomic Energy Cooperation Act, allowing shipments of nuclear fuel and technology to India for use in its civilian nuclear power program. [11] India had not yet ratified this agreement. A major point of difference was US insistence that used fuel from any US-supplied reactor must not be reprocessed.” [12] This would inhibit practices in India’s energy and weapons system, for both kinds of facility were, at the time of writing this article (May 2007), still producing plutonium for reuse. The agreement would require complete separation of power facilities from weapons facilities, which were still exchanging reprocessed materials.

“The opposition to accepting safeguards on the grounds that it is difficult to separate civilian and military facilities, and that it compromises on national security, is, however, ill-founded. Demarcation of facilities as military should not be difficult but a detailed exercise of identifying these has to be carried out. The manner in which the Department of Atomic Energy (DAE) declared the Bhabha Atomic Research Centre (BARC) and a few other facilities out of bounds for AERB inspections with a single bureaucratic order in 2000, would suggest that the process should not pose any administrative problems either. In any case, the agreement is for a phased declaration. But there will be a substantial cost involved and that is the price one has to pay for failing to plan for long-term fuel needs properly.

Since the research reactors Dhruva and Cirus are the chief sources of weapons-grade plutonium, and it makes no sense to use reactor-grade plutonium for weapons, one can easily demarcate all the power plants as civilian. It would seem that the main costs would pertain to replicating reprocessing plants specifically for weapon purposes because one cannot declare the existing plants - which currently reprocess spent fuel from power reactors as well as research reactors to yield plutonium for the breeder programme and weapons respectively - as military.

It is obvious that one-way traffic of nuclear material from military to civilian reactors does not pose any problem; it is only when there is a two-way traffic, as in a reprocessing plant, a dedicated facility for each objective becomes necessary because of safeguards on the material that comes in and goes out. There could be other costs involved in duplicating personnel and equipment required in this as well as other operations where people and equipment double up for the twin objectives at present.” [13]

Since the UK and France, both countries which reprocess fuel, have also shown interest in the huge commercial market which India could represent, it seems likely that the pressure on the USA to relent on its anti-reprocessing stance will grow. Given the profit issues and that the corporate forces have an interest in this stance changing, resistance will be difficult.

In addition, however, to purchase uranium from the 45 member Nuclear Suppliers Group would require India to sign the NPT, which India does not want to sign. It may be that the very factors which proponents of FBRs cite as discouraging their research and production in countries like the US are positives for FBR research and production in India. In this case, India is probably the place where FBR technology and production may break through first if it is going to.

NOTES

[a] Many thanks to G.L. Cowan for his rewrite of this paragraph which contained inaccuracies and which originally read: "During the operation of a conventional nuclear power station over the years, via the reactions that occur in the atomic pile, the U238 that is there gets converted into fissionable material which includes plutonium and other dangerously radioactive products. These products are increased in a breeder reactor. In conventional reactors moderators slow the neutron firing down so that the neutrons hit each other more easily and accelerate the natural rate of fission."

[b] Thanks again to G.R.L. Cowan for his changes to this paragraph as well, correcting the error, contained in the original text:
"The Fast Breeder reactor (FBR)
Without the moderator the reactor becomes a ‘fast breeder’ with a bias towards the U238 being converted and producing more fuel than it actually burns. In a fast breeder the nuclear waste products which present such a problem in conventional reactors become more fuel. The aim is to make this a closed and remote controlled process."

It is very hard to find people who will go to the trouble of carefully reviewing the technical detail in such articles, but the authors, who cannot be specialists in every facet they write on, need this kind of feedback. G.R.L. Cowan's feedback makes this article and this site worth visiting for people trying to understand an area where very little is written for the non-specialist in a field where obscurantism compounds rapid change and complex concepts and engineering. Sheila Newman.

[1] http://www.uic.com.au/nip98.htm
[2] Also known as a Thermal Breeder Reactor and an Advanced Heavy Water Reactor
[3] Anissimov,M., “A Nuclear Reactor in Every Home”, Oct 16 2006, www.acceleratingfuture.com/michael/blog/?p=212
[4] The Megatons to Megawatts Program is the name given to the program that implemented the 1993 United States-Russia non-proliferation agreement to convert high-enriched uranium (HEU) taken from dismantled Russian nuclear weapons into low-enriched-uranium (LEU) for nuclear fuel. From 1995 through mid-2005, 250 metric tons of high-enriched uranium (enough for 10,000 warheads) were recycled into low-enriched-uranium. The goal is to recycle 500 metric tons by 2013. Much of this fuel has already been used in many nuclear power plants in the U.S., as it is indistinguishable from normal fuel. http://www.usec.com/v2001_02/HTML/megatons.asp
[5]‘Electricity’ has been substituted for ‘energy’ here as a correction of a mistake in the full chapter version in The Final Energy Crisis.
[6] Figure 6, “History and forecast of uranium production,” in “Uranium depletion and nuclear power: Are we at peak uranium?” http://www.theoildrum.com/node/2379 Accessed 3-12-07 and “According to the authoritative “Red Book” produced jointly by the OECD’s Nuclear Energy Agency and the UN’s International Atomic Energy Agency, the world’s present known economic resources of uranium, exploitable at below $80 per kilogram of uranium, are some 3.5 million tonnes. This amount is therefore enough to last for 50 years at today’s rate of usage – a figure higher than for many widely used metals.” Source: “Can Uranium supplies sustain the global nuclear renaissance?”, World Nuclear Association Position Statement, http://www.uic.com.au/WNA-UraniumSustainability.pdf and Jan Willem Storm van Leeuwen and Philip Smith Source: http://www.greatchange.org/bb-thermochemical-rebuttal_WNA.html
[7] Correspondence with Ian Hore-Lacy, Director – Information, Australian Uranium Association, Melbourne, http://www.uic.com.au Mon 4/30/2007 11:58 PM and Tue 5/1/2007 12:34 AM
[8] REF: http://www.uic.com.au/nip45.htm
[9] The core is the central part of a nuclear reactor containing the fuel elements and any moderator. A fast neutron reactor is configured to produce more fissile material than it consumes, using fertile material such as depleted uranium in a blanket around the core. Source of definition material: http://www.world-nuclear.org/info/inf51.htm
[10] Frontline, Volume 22 - Issue 16, Jul 30- Aug 12, 2005, http://www.hinduonnet.com/fline/fl2216/stories/20050812005700700.htm
[11] Nuclear Technology Milestones 1942 to Present, Nuclear Energy Institute, Washington, http://www.nei.org/index.asp?catnum=3&catid=265
[11] “Sticking points in US-India talks”, Reuters, 30/03/07, Nucleonics Week 12/4/07, FT 19/4/07.
[12] R. Ramachandran, “Behind the bargain”, Frontline, Volume 22 - Issue 16, Jul 30- Aug 12, 2005, http://www.hinduonnet.com/fline/fl2216/stories/20050812005700700.htm

Summary: The report's two crucial conclusions are that the greenhouse problem can be solved by adoption of alternative technologies, and that this can be done at negligible cost to GDP.

The glaring fault in the Report is its failure to discuss the energy assumptions underlying these conclusions, which I argue are invalid.
The core assumption is that alternative energy technologies can be scaled up by the huge magnitudes required to replace fossil fuels.

There has been almost no study of this issue, i.e., the limits to renewable energy sources. The paper looks at the quantities of wind, solar, geo-sequestration etc. that would have to be provided if Garnaut's conclusions were to be achievable, and indicates why these quantities are impossibly large.

If these arguments are valid then it will not be possible to provide the amount of energy consumer capitalist society demands while achieving acceptable greenhouse targets. lt is argued that the greenhouse and energy problems must be seen as elements within the general limits to growth predicament, and that these and other alarming global problems cannot be solved without transition to some kind of Simpler Way.

The 12 page paper is dated 13-11-08 and can also be found at ssis.arts.unsw.edu.au/tsw/GarnautFinal.html Critical feedback on the paper would be welcome.

The Final Garnaut Report; A Radical Critique of its Energy Assumptions.

13.11.2008

The publication of the Final Garnaut report (2008) has made a significant contribution to increasing awareness of the magnitude and urgency of the greenhouse problem and it has moved Australia towards the implementation of carbon trading. However the lengthy and detailed report is based on crucial energy assumptions that are not discussed let alone established. The argument below is that these assumptions are invalid and therefore Garnaut’s conclusions are unsound and his policy recommendations are seriously misleading.

Like the Stern (2007) and IPCC Fourth Report Working Group 3 (2007) analyses of carbon mitigation Garnaut’s core conclusion is that the greenhouse problem can be solved by the adoption of alternative technologies at negligible cost to GDP. In other words, these three highly influential reports reaffirm the common belief that conservation effort, geo-sequestration, nuclear energy and renewable energy sources can cut greenhouse emissions to safe levels while GDP continues to grow at more or less historical rates. Remarkably, none of these reports considers the reasons for concluding that the alternatives cannot replace fossil fuels, at any economic cost. This case is detailed in my Renewale Energy Cannot Sustain Consumer Society, (Trainer, 2007a), and a more recent summary of the case is given in Trainer 2008. (Critiques of the Stern and IPCC Reports are given in Trainer 2007b, and Trainer 2007c.)

Garnaut’s treatment of the crucial assumption

Garnaut concludes that the desirable target for atmospheric CO2 concentration is 450 ppm (although he recommends a 550 ppm target on the grounds that the lower one is not likely to be accepted.) The IPCC estimates that the 450 ppm target would result in a 2 – 2.4 degree rise in temperature. Many would now say that this runs an unacceptable risk of global ecological damage. Hansen (2008) argues that the appropriate target is in the region of 380 ppm, which the world has already passed.

Garnaut aligns with the IPCC in saying that the target would require all carbon emissions to be eliminated by 2100. He anticipates that by 2100 Australian electricity consumption is likely to be 7 times as great as it is now, i.e., around 5.25 EJ/y. (Fig. 20.10.) His Fig. 20.18 anticipates that globally electricity will be generated at a rate that is 10.3 times the present rate, i.e., 103 TWh/y or 620 EJ/y. These figures represent huge increases on present electricity consumption rates, and Garnaut is saying they will be achieved without carbon emissions (p. 482) or significant economic cost. Apart from a few superficial remarks, no explanation, derivation or defence of these assumptions or conclusions is given in the 700 page Report. Almost no reference is made to the possible magnitudes of the contributions that might be made by renewable energy sources, geosequestration and nuclear energy. He simply assumes or states that alternative technologies will be able to cut emissions sufficiently. Almost all of the relevant statements in the 700 page report are given in the brief Appendix 1 to this paper.

The energy targets.

First, note again the magnitude of the problem. By Garnaut’s own account the 2100 global target is a 10 fold multiple of present electricity supply, and a 7.5 multiple for Australia, with 95% of it coming from non-carbon emitting energy sources.

It is not clear how Garnaut accounts Australia’s probable transport energy and the figures do not seem to add up. Fig. 21.4 shows transport emissions rising from 80 million t/y to 350 million t/y under business as usual, but falling to about 20 million t/y by 2100 under the Standard run. (p. 512.) It is assumed that by the end of the century zero-emissions fuels account for 90 per cent of fuel use in these transport modes. (p.. 513.) This would mean that transport energy demand would multiply by 4.375, to 4.725 EJ.

However Fig. 20.10 shows total electricity demand is expected to be 5.25 EJ by 2100, which would mean only .875 EJ would be left to meet direct electricity demand, which is already .7 EJ and increasing at around 3% p.a. If direct electricity demand increases only at the rate ABARE expects Australian energy demand to settle to to (1.9% p. by 2030), then by 2100 it will be 6 times as great as it is now, around 4.2 EJ/y. If we add to this the electricity Garnaut assumes for transport the total is 9.45 EJ, 13.5 times the present amount, not the 5.25 EJ Garnaut’s Fig. 20.10 indicates.

The faulty methodology; "Top down" modeling.

Like Stern and the IPCC Working Group 3 and virtually all analyses of carbon mitigation, Garnaut has relied solely on either "bottom up" modeling (costing each unit of replacement technology and multiplying by the amount that would be needed) or top down modeling (estimating the effect that overall measures such as a carbon tax would have on a choice of energy sources). Garnaut’s approach is in general "top down" although he says some of the studies referred to were "bottom up".

The logic of the former approach asks what amount of tax on carbon would raise the cost of carbon based energy to the point where users would turn to other sources. To answer this question satisfactorily we would need to know firstly what the other sources cost, and more importantly whether they can be implemented on the scale required. This second question is not asked by Stern, the IPCC, or Garnaut. The following section sketches some of the many reasons for concluding that the alternatives cannot be scaled up sufficiently.

The reasons why alternatives cannot replace carbon fuels.

Let us take the global electricity target Garnaut assumes, 620 EJ/y, and also assume one-third of this comes from geosequestration, wind and solar sources respectively.

Geosequestration.

If one-third of 620 EJ, i.e., 206 EJ was to come from coal via geosequestration which captured 90% of emissions (and it might be only 80%), this would be about 6 times the present amount of world electricity produced from coal. If 90% of emissions were captured, emissions from electricity generation alone would be about 1/2 of the present global total CO2 emission level, when the target must be zero. In addition at that rate of coal use the commonly estimated probably recoverable coal resource of 1 trillion tones would last less than 40 years. (However the Energy Watch Group, 2007 (see also Hienberg, 2007), believe resources are much more limited than has been generally assumed, and that coal supply could peak within about 2 decades.

Note that all this is only for the provision of electricity and other forms of energy would also need to be explained. At present 40% of Australian energy is not accounted for by electricity plus transport.

Wind

If 206 EJ of electricity was to come from wind, where would this amount of capacity be located? Garnaut notes that there could be a problem of "site availability" (p. 481.) Trieb (undated), a strong advocate of renewables, estimates that total on and off shsore European potential is only 4 EJ. Europe would have to draw from a far wider area such as Czisch (2004) advocates extending from Morocco to Khazakhstan. This would set problems to do with transmission loss and equity; i.e., the right of other people in those areas to a share of the wind energy they produce.

If Australia is to use 7 times its present .7 EJ/y of electricity, and one-third of this is to come from wind, then wind supply would be 1.7 EJ/y. This is 50 times the amount of wind energy that the Sustainable Energy Development Authority estimated in 2005 might be provided by wind farms in NSW. Australia would need about 156,000 windmills of 1.5 MW capacity (at global average capacity of .23; IPCC, although Australia is likely to exceed this.) Average annual mill production for replacement purposes would have to be about 6,000, costing perhaps $9 billion p.a., not including transmission line replacement.

If we assume that Australia has 5000 km of coast with ideal wind conditions, then at normal spacing (5 x 10 diametres) the mills would form a band 156 km wide. (This is a significant underestimate, given the fact that areas are excluded by prior use, and that wider spacing would be required in a continuous band.)

Photovoltaic energy.

To derive one-third of a world 620 EJ electricity supply from PV sources, at average Sydney insolation, yielding about .85 GJ/m/y, would require 242 billion square metres of panels, which would probably be 27 metres per person (for 2050 population). For most of the world insolation would be much lower than in Sydney.

If Australia was to derive 1.7 EJ p.a. from solar panels we would need 2 billion square metres of panels, possibly 66 square metres per person. At the present cost, including balance of system cost, this would come to $475,000 for a household of four for one-third of national electricity supply. These PV panels could only supply electricity for about 7 hours a day on average.

Nuclear energy.

Nuclear energy is almost irrelevant to a discussion of the long term global energy future in view of the limited Uranium plus Thorium resources, unless breeder or fusion technologies are assumed. (Trainer 2007, Chapter 9.) The commonly estimated 3.7 – 4 million tones of Uranium would generate a total of only about 600 EJ of electricity, i.e., the equivalent of one year’s demand at the 2100 global rate Garnaut anticipates. Taking the high resource estimates and adding Thorium might multiple the quantity by 6. (Zittel, 2006.)

Integration problems.

Even if these formidable quantities of wind and solar energy could be collected and afforded, the main problems surrounding renewables have not yet been raised. These are to do with the integration and storage problems they set. No matter how much wind and PV capacity we build they can provide no energy at all – on a calm night. Output from wind and solar sources rises and falls markedly, and can do so quickly. All PV capacity would come on stream within a couple of hours, but it can take many hours to ramp up a coal-fired plant to full output. (Gas plant can ramp up quicker than coal, but gas use will not be a significant component in a renewable world, because it emits CO2, and gas resources will be largely exhausted later in this century.)

These are not difficult problems when wind and sun contribute a small proportion of demand, say up to 15% each, because adjusting the surplus coal/nuclear generating capacity can accommodate their varying output.

Very large quantities of electricity cannot be stored. Pumped hydro systems are the best option, but can cope with only a small fraction of the demand. Hydroelectricity makes up only about 6% of Australian electricity supply. To store as hydrogen means that possibly 75% of the electrical energy generated would be lost, not including the embodied energy cost of building the elaborate hydrogen generating, processing, storing and electricity regenerating plant. (Bossell, 2004.) That is why a number of people believe we will never have a large scale "hydrogen economy." (See Trainer, 2007a, Chapter 6.) Garnaut devotes one sentence to this enormous storage problem, simply asserting that we can expect it to be solved. (p. 481.)

Note also that if the wind sector is large, for every 1000 MW of wind capacity added up to 1000 MW of coal or nuclear power might also have to be built, to use when the winds are down. This would add greatly to the capital cost of the new system, and clash with greenhouse goals.

If the PV contribution fell from 1.7 EJ to zero in a few hours a load equivalent to about 70 coal or nuclear power stations of 1000 MW capacity, twice our present total generating capacity, would have to be picked up by some other source.

Could solar thermal systems solve the problem?

Because solar thermal systems have the capacity to store heat that can be used to generate later they will probably be the most valuable contributors to a renewable energy world. However it seems that even in Central Australia, possibly the best solar thermal site in the world, these systems will not be ale to provide significant quantities of electricity over the three winter months at an acceptable cost. (For a more detailed discussion, see Trainer, 2008.)

In winter output from trough systems in use in the best US sites goes down to 20% of summer output. The analysis of relevant factors such as direct normal insolation levels, the probable performance of east west troughs in winter, operating and embodied energy costs, and transmission losses from distant sites, seems to leave little doubt that trough systems in winter would not be viable. Average 24 hour flows might be in the region of 10 W/m.

Dishes would be more effective than troughs, but output from the US Mod dish systems corresponds to a continual flow of 18-25 W/metre over a winter month. Performance data on other systems (Davenport, 2008) indicates c. 25 W/m flows. However such figures apply to use of efficient Stirling engines generating electricity at the focus of each dish and these are not applicable to our purpose, which requires heat storage.

The ANU group is exploring the use of ammonia dissociation (splitting into hydrogen and nitrogen) as a way of storing heat from dishes. (Lovegrove and Luzzi, 1996.) They believe the energy efficiency of the chemical process could be .7, and that half the energy entering the dish should be available for generating electricity after storage. This approach is very promising but its net energy efficiency seems to be problematic. For instance if the above Mod etc. winter output figure is reduced to .7 to take into account the ammonia storage process efficiency, and reduced again to take into account the lower efficiency of steam generation compared with Stirling engines, then the winter output would probably be significantly lower than the above 18-25 W/m reported for dish–Stirling systems. Note that at 25 W/m a large power station would need a 40 million square metre collection area, probably costing in the region of $(A)35 billion.

From this gross flow must be subtracted the embodied energy cost of building the collection plant and the heat storage plant involving large and heavy pressurised tanks for the ammonia process. The attempt to assess the embodied energy cost of this system in Trainer 2008 indicates high figures for very large scale systems. Fortunately the Whyalla project being built by Wizard Power will clarify some of these issues. Its developers say they are not yet clear about probable performance and in any case understandably will not make their technical information public.

Also to be deducted are the embodied energy costs of the very long distance transmission lines from central Australia to Eastern coasts. For European supply from Eastern Sahara these could be 15% of energy generated.

Perhaps the most difficult problem for solar thermal systems is set by the need for several days storage of energy in view of winter cloud occurrence. The climate data in Trainer 2008 shows that in central Australia in each winter month there might be two runs of 4 days with little sunlight. Heat storage capacity capable of coping with such runs would be extremely costly in terms of dollars and embodied energy. However if it is assumed that solar thermal is going to solve the intermittency problem set by other renewable source a far greater storage problem is set. This would require solar thermal plant to be equipped with the capacity to generate, accumulate, and store energy output from perhaps three times as much wind plus PV etc. plant as there is solar thermal plant, for several days.

For these reasons it seems that although solar thermal systems will probably be the most valuable contributors to a renewable energy world, they will not be able to guarantee electricity supply in winter even in Australia.

The conversion problem.

Discussions of the potential of renewable energy sources usually fail to take into account the need to convert energy from forms that are available to forms that are needed. Conversion is typically quite energy-inefficient, meaning that much more energy needs to be generated than might appear to be the case.

Electricity accounts for only about 20% of Australian final energy consumption. Garnaut does not explain where the perhaps 40% of energy other than direct electricity and transport energy is to come from, and he therefore does not deal with the losses of energy in conversion from one form to another Nor does Garnaut deal with the fact that sea and air transport cannot be fuelled by electricity.

It should be made clear that little of the global energy budget is likely to come from biomass. (Garnaut does not assume a large contribution.) In Chapter 5 of Trainer 2007a it is explained that if 9 billion people were to have the present Australian amount of transport energy per person from cellulosic ethanol, we would have to harvest a 23 billion ha plantation on a planet with only 13 billion ha of land. (Australia’s biomass potential is likely to be far greater than most countries.)

Energy conclusions.

At the very least the above discussion shows that there are several major difficulties and important issues which need to be resolved satisfactorily before confident conclusions can be arrived at, yet Garnaut does not deal with any of these. He anticipates an Australian electricity consumption that is 7.5 times the present amount, with 7 times the present amount coming from non-carbon based sources, and he anticipates global electricity consumption 10.3 times as great as at present but in a report of 700 pages gives no attention to showing that such huge multiples can be provided. This paper has pointed out that there are a number of impressive lines of argument supporting the conclusion that they cannot be provided.

All the issues raised above were presented to Garnaut as a mid-2008 response to the Interim Report, in the paper Trainer 2008. Receipt of this paper was acknowledged but it is not included in the list of submissions received in the Final Report.

It should be stressed that the points made above are not arguments against renewable energy. We must move to total dependence on renewables as quickly as possible and we can all live well on them, but not in an affluent-consumer-capitalist society.

The Limits to Growth position.

For some 50 years a "limits to growth" analysis of our situation has been accumulating, taking into account many more than energy issues. Its core point is that consumer society is grossly unsustainable because its levels of production and consumption are far higher than can be kept up for long or than all could ever rise to. The quest for affluence and growth is the direct cause of the many alarming global problems now accelerating. Just to note one of these impressive lines of argument, the Australian per capita footprint, around 8 ha of productive land, is about 10 times the amount of productive land that will be available on the planet by 2050 (even ignoring land losses.)

Considerations of this kind support the claim that consumer-capitalist society is not just grossly unsustainable, it cannot be made sustainable. A way of life which is rapidly destroying ecosystems and depleting resources, that is shared by only one-fifth of the world’s people but that all the rest are striving for, that insists on doubling consumption every 23 years, that is possible for a few only because they are taking far more than their fair share and condemning some 4 billion people to poverty – can’t be made sustainable or just.

Even though Garnaut actually briefly discusses the problem of resource limits (p. 69 and Table 3.3), he defers to the dominant ideology regarding the limits theme. He says there is no point considering any option to the greenhouse problem which threatens significant slowing of growth, let alone which involves a transition to much lower levels of production and consumption. He says, "It is neither desirable, nor remotely feasible, to seek to lower the climate change risk by substantially slowing the rise in living standards anywhere, least of all in developing countries. If such an approach were thought to be desirable in some expression of distant and idiosyncratic values, neither Australians, nor people in the developing countries, would accept it.(p. xxl.) Global and national mitigation is only going to be successful if reductions in emissions can be made and demonstrated to be consistent with continued economic growth and rising living standards." (p..)

For several decades some of us have been arguing that the only way out of the global predicament is by huge and radical transition to some form of Simpler Way, in which the core elements are non-affluent lifestyles, mostly small local economies under participatory social control and not driven by market forces or profit, and without any growth at all. (See The Simpler Way website, Trainer 2006.) Such a society would not be possible without equally radical change away from the competitive, acquisitive value syndrome that has driven Western culture for several hundred years.

There is now a small but rapidly growing global movement attempting to build an alternative of this general kind, most evident in the Global Ecovillage Movement and the Transition Towns initiative. Yet, given the overwhelming dominance of the commitment to material affluence and economic growth, the prospects for global transition to some kind of Simpler Way must be judged to be remote. This conclusion is powerfully reinforced by the failure/refusal of governments, media, bureaucracies, people in general, and the intelligentsia to recognise any need to question the commitment to pursuing limitless affluence and growth. Garnaut’s final Report powerfully reinforces the faith that there is no need to think about limits or transition to simpler ways, because alternative technologies will be able to eliminate the greenhouse problem while delivering with vastly greater quantities of energy, and at negligible cost.

Appendix 1. Statements relevant to the adequacy
of renewable energy sources.

- There is a path to Australia being a low-emissions economy by the middle of the
21st century, consistently with continuing strong growth in material living standards.(p. xvii.)
- The solutions to the climate change challenge must be found in removing the

- The interaction of the emissions trading scheme with support for research,
development and commercialisation and for network infrastructure will lead to
successful transition to a near-zero emissions energy sector by mid-century. (p. xliii.)
- Substantial de-carbonisation by 2050 to meet either the 450 or 550 obligation is

- The development of storage technologies and ongoing technical innovation is expected to combine with geothermal energy to begin to replace fossil fuels as the long term solution to our energy needs. Near zero emissions coal technology will have carried out its primary role and remain a significant energy source for some time. (p. 482.)

In Chapter 11 Garnaut makes it clear that he has not examined the potential of particular renewable energy technologies (p. 251) but he regards the most likely of these to be carbon capture and storage. The key numbers, such as those represented in Figure 11.1 stating costs associated with the 450 and 550 ppm targets, cannot sensibly be given without a detailed and convincing explanation of precisely what mix of alternatives might make their contributions and at what cost for each of them. No derivations of these conclusions are given.

- Technological development of any type is difficult to predict. When powerful incentives to innovation are introduced to a market environment, however, human ingenuity usually surprises on the upside. How will this ingenuity manifest itself in the face of high emissions prices and increased public support on a global scale for research, development and commercialisation of low-emissions technologies? We do not know, but there are good reasons to believe that, if we get the policy settings right over the next few years, the technological realities later in the century will be greatly superior to those which, for good reason, are embodied in the standard technology variants of the models used by the Review. (p. 273.)

The footnote says “2 The standard technology assumptions represent a best estimate of the cost, availability and performance of technologies based on historical experience, current knowledge and expected future trends. The standard scenario includes some technological cost reductions through learning by doing and improvements in existing technologies and the emergence and wide-scale deployment of some currently unproven technologies such as carbon capture and storage, hot rocks (geothermal) and hydrogen cars. It does not, however, include a backstop technology in any sector.” (p. 273.) No references are given.

- As one alternative to the standard technology assumptions, the Review
modeled an enhanced technology future, embodying various assumptions of more rapid technological progress, none of which seems unlikely. (p. 252.)

The essentials in the footnote are

- Faster energy efficiency improvements of an extra 1 per cent annually from 2013 to 2030, an extra 0.5 per cent from 2031 to 2040
- More effective carbon capture and storage in response to higher carbon prices
- The share of combustion CO 2 captured increases from 90 per cent to 99 per cent as the permit price rises from zero to $140/t CO2-e
- Faster learning by doing for electricity and transport technologies by increasing the parameter for the learning functions by 50 per cent relative to the standard assumptions over the whole simulation period, and
- Non-combustion agricultural emissions are eliminated when the carbon price exceeds $250/t CO-e. (p. 273.)

Each of the statements in this footnote lacks support, raises major problems and is open to radical criticism. Firstly, the future rate of energy efficiency improvement is highly uncertain and there are poor grounds for assuming particular rates regardless of whether or not the past yields clear figures. We are in an era of great uncertainty, risk and difficulties. Certainly in the short run the now greatly increased incentive is likely to generate considerable gains, but after the low hanging fruit have been picked there will probably be severely diminishing returns. Yet Garnaut assumes likely rates of improvement out to 2040, without supporting argument.

One of the most challengeable aspects of Garnaut’s optimism concerns geosequestration. In this passage he proceeds as if 99% capture and storage will be achieved. (E.g. pp. 273, 482.) It is generally assumed, including by the IPCC, that the limit is 80 -90%. In any case geosequestration can only be applied to that perhaps 50 - 60% of carbon emitting energy generating plant that is stationary. What’s more, Garnaut assumes without explanation that this rate will be possible at the relatively benign cost of $140/t – CO2e.

The third claim is not clear but seems to be, again without explanation, that the figures in the first (energy efficiency) paragraph can be increased by 50%.

In the fourth statement he baldly asserts an outcome which, to say the least, calls for serious examination. How are agricultural emissions to be eliminated, and how is this brought about by the carbon price of $250/t?

In Economic Modeling Technical Paper 1 it is said that there was a detailed treatment of renewable generation in the MMRF modeling, (p. 10), but no information is given.

The most appropriate statement Garnaut makes regarding the core problems is, “Many of the individual technologies are technically proven. Issues of scale, integration and economics are likely to be the greatest challenges. The challenge posed by the scale of the task is the most significant of these.” (p. 495). The reference to the scale of the problem is appropriate but no discussion is offered or referred to.

Again these statements are in effect all the Report includes which refer to, let alone defend the crucial assumption that alternative technologies can solve the problem. In other words almost no case is given and it has been simply assumed that sufficient alternatives can be found to provide more than ten times present electricity supply, while almost completely eliminating emissions.

by Professor Ted Trainer of UNSW.

Bossel, U., (2004), 'The hydrogen illusion; why electrons are a better energy carrier', Cogeneration and On-Site Power Production, March – April, pp. 55 – 59.

Czisch, G., (2004), Least-cost European/Transeuropean electricity supply entirely with renewable energies, www.iset.uni-kassel.de/abt/w3-w/project/Eur-Transeur-El-Sup.pdf

Davenport,

Energy Watch Group, (2007), Coal Resources and Future Production, April. http://www.energybulletin.net/28287.html

Garnaut, R., (2008), The Garnaut Climate Change Review; Final Report.
http://www.garnautreview.org.au/index.html

Hansen , J., (2008), http://www.worldchanging.com/archives/007829.html

Heinberg, R., (2007), “Peak coal; Sooner than you think”, On Line Opinion, 21, May,
http://www.onlineopinion.com.cua/view.asp?article=5869

Intergovernmental Panel on Climate Change, (2007), Intergovernmental Panel on Climate Change Fourth Assessment Report, Climate Change 2007: (Working Group 3), Mitigation of Climate Change, Summary for Policy Makers.

Lovegrove, K., Luzzi, A., (1996), "Endothermic Reactors for an Ammonia Based Thermochemical Solar Energy Storage and Transport System", Solar Energy, vol. 56, pp. 361-371.

Stern, N., 2006, Review on the Economics of Climate Change, H.M.Treasury, UK, Oct., . http://www.sternreview.org.uk

Trainer, T., (2006), The Simpler Way website, http//ssis.arts.unsw.edu.au/tsw/

Trainer, T., (2007a), Renewable Energy Cannot Sustain A Consumer Society, Dordrect, Springer.

Trainer, T., (2007b), The Stern Review; A critical analysis of its mitigation optimism, http://ssis.arts.unsw.edu.au/tsw/Stern.html

Trainer, T., (2007c), A critical discussion of the IPCC analyses of carbon emission mitigation possibilities and costs, http//ssis.arts.unsw.edu.au/tsw/IPCCcrit.html

Trainer, T., (2008), Assessing the limits of solar thermal power generation. http://ssis.arts.unsw.edu.au/tsw/solartherm.html

Trieb, F., (undated), Trans-Mediterranean Interconnection for Concentrating Solar Power; Final Report, German Aerospace Center (DLR), Institute of Technical Thermodynamics, Section Systems Analysis and Technology Assessment.

Zittel, W, et al., (2006), Uranium resources and nuclear energy, Energy Watch Group, Dec.

The The Final Energy Crisis (2nd edition), Pluto Press, UK, 2008 is a book like no other on the topic of energy and peak oil of which I am aware.

It went well beyond the usual formulaic basics and it satisfied my appetite for stimulation rather than repetition and reinforcement. It is designed to be read in parts and in no particular order. However, nearly all of the articles are a subject in their own right, to be absorbed and considered slowly. The sections and chapters are:

1. Introduction by Sheila Newman

Part I: Measuring Our Predicament

2. 101 Views from Hubbert's Peak by Sheila Newman
3. Prediction of World Peak Oil Production by Seppo Korpela
4. The Assessment and Importance of Oil Depletion by Colin Campbell
5. Coal Resources of the World by Seppo Korpela

Part II: Geopolitics

6. The Caspian Chimera by Colin Campbell
7. Update to the Caspian Chimera by Sheila Newman
8. The Battle of the Titans by Mark Jones
9. Dark Continent, Black Gold by Andrew McKillop
10. The Chinese Car Bomb by Andrew McKillop
11. Venezuela, Chavez and Latin american Oil on the World Stage by Sheila Newman

Part III: The Big Picture - False Solutions, Hopes and Fears

12. No Choice but International Energy Transition by Andrew McKillop
13. Population, Energy and Economic Growth: The Moral Dilemma by
14. by Ross McCluney
15. Peak Soil by Alice Friedemann
16. Notes on Terra Preta by Sheila Newman
17. Nuclear Fission Power Options by Sheila Newman
18. Fusion Ilusions by Michael Dittmar
19. Geothermal by Sheila Newman

Part IV: After Oil

20. France and Australia After Oil by Sheila Newman
21. North Korea: The Limits of Fossil-Energy Based Agricultural Systems by Antony Boys
22. How will Japan Feed itself without Fossil Energy? by Antony Boys
23. The Simpler Way by Ted Trainer
24. In the End: Thermodynamics and the Necessity of Protecting the Natural World by Sheila Newman

Like other books on the subject of 'peak oil' The Final Energy Crisis, (with engineering professor, Seppo Korpela and oil geophysicist Colin Campbell) does examine and test Hubbert's theory - for gas and coal as well as oil (and gives you the maths to test yourself in an appendix) - but the book doesn't stop with the usual (updated) depletion curves.

It is really the beginning of the elaboration of a new paradigm, which seriously examines (among other possibilities) nuclear fusion, nuclear fission, geothermal, terra preta/agrichar and the logistics of energy distribution in different social systems. It is like most books before this were explaining that society depends on fossil-fuels, but this book assumes you know that, and discusses the world within that knowledge perspective. It is for people who have already looked into the subject broadly but would like help to understand the limitations of different proposed technologies and political solutions. I read somewhere that the Editor had said that it was written for people who dealt with problems and fear by learning as much as they could.

Not limited to the 1000 word article or the one minute sound-bite, it also engages relevantly in original and sophisticated geopolitical and economic analysis, for instance about the history and future of Latin American oil and the possibility of realignments among ex-Soviet Union and third-world oil and gas producers.

The "Battle of the Titans", written in 2002 by the late Mark Jones, and also included in the first edition, is a prophetic piece which shows how the reckless and wasteful 'free market' energy policies since the days of President Reagan have caused the economy of the US to have become vastly less efficient than those of Europe and Russia. In coming months and years the energy vulnerability of the US will compound the problems caused by the collapse of its finance sector.

Newman assumes that her readers will be intelligent and adventurous and doesn't limit her authors to basic reviews of simple flow-energy technologies. Rather, she invites us to jump in the deep end and follow particle physicist, Michael Dittmar, as he dissects nuclear fusion technology in the 10 billion Euro International Thermonuclear Experimental Reactor (ITER) project on the basis of the durability of nuclear 'carpets' and the half-life of tritium.

Dittmar's description of the staggeringly complex and difficult technical problems to be overcome before the dream of unlimited cheap power held out by the proponents of nuclear fusion is to be realised left me in little doubt that further expenditure on ITER is a massive wast of public resources.

Similarly, in the chapter, "Peak Soil", Alice Friedemann, shows, in a lively and pithy analysis, that industrial bio-fuel production on a large scale will only make our energy and environmental circumstances worse and not better. Friedemann plunges head-first into a meter of topsoil to see the damage which destroying crop-stubble for cellulosic ethanol might pose to world food supply by destroying an environment which supports "ten 'biomass horses' underground for every horse grazing. Sadly, some of Friedemann's forebodings have become reality in recent months as the diversion of agricultural production to bio-fuels has caused food shortages in many countries.

Other technologies, which are somewhat more promising than the above two described in the book are geothermal and the other more familiar forms of renewable energy such as wind, solar, hydro-electric, tidal, etc, and even nuclear fission. However, as Ross McCluney shows in the chapter "Renewable Energy Limits", all have their limitations and problems. Ultimately we have no choice but to scale back our consumption of energy. We must certainly dispense with any expectation that we can continue to raise both our own material living standards and those in the Third World in a planet with an ever increasing population.

Nuclear fission writing is usually limited to very polemical argument for or contra. These polemics are discarded and nuclear is examined from a host of unusual perspectives, including the importance of trade economics and income from fuel recycling in preserving certain nuclear proliferation treaties, the influence of insurance costs in preserving old designs, why no-one is building thorium fueled fast breeder-reactors, but why India might take a lead in breeder reactor technology and thorium fuel. Newman admits that it is very difficult to evaluate the costs and returns of nuclear power plants, including the dangers, but describes a relatively simple method by which one might begin to evaluate and compare any fuel source and technology, including nuclear.

In the chapter "How Will Japan Feed Itself Without Fossil Energy", agricultural scientist, Antony Boys explores Japan's carrying capacity in the Edo period (1603-1867) and contrasts it with import reliance and nitrogen overload in the twenty-first century.

Already some societies have been forced to confront the challenge of depletion of fossil fuel, particularly petroleum. Two examples are given, both from the 'socialist' camp, Cuba and North Korea; one reputedly successful, the other a disaster. As Cuba transformed itself, in the 1990's, to cope with a dramatic drop in oil imports following the collapse of the Communist bloc in 1989, North Korea, also without its own deposits of gas or oil, descended into famine when its imported oil and gas supplies fell by more than 50% after 1990. This is described in the Chapter "North Korea: The limits of Fossil Energy-Based Agricultural Systems" by Antony Boys.

Sheila Newman, in the chapter "France and Australia after oil", raises the "Cuban solution" as an example of the principle of relocalisation. After analysing pre-fossil fuel France and her options for the future, Newman makes surprising and frightening political predictions for Australia, based on whether it adopts relocalisation or 'big' power options, such as nuclear and massive coal-operations. She identifies the big power options with the interests of infrastructure development lobby groups that are promoting big power developments in the expectation that these will service huge new cities of new immigrant consumers, supplied by Australia's huge and unpopular mass immigration program. Newman points out that the democratic interests of Australians are unlikely to be served by these corporate agendas, which she notes have also distorted the Australian water supply situation. She also seriously questions the costs of financing such schemes and the logistics of building and maintaining them. Reading her analysis, one starts to seriously doubt that the 'important people' who decide these things have actually done the maths.

For me, this is one of those rare books which left few questions begging. It seems as if the editors and the contributors had already gone nearly everywhere I had intended to go and a good many other places, besides, and had thoroughly researched the issues and thought through the questions posed. The orthodoxies of the mainstream environment movement and scientific community are held up to critical scrutiny and often rejected. This is particularly the case with the last two sections which are focused on proposed solutions and future prospects. Andrew McKillop's critique of 'free market' 'solutions' to the energy crisis, in particular the 'carbon finance and credits circus', in the chapter "No Choice But International Energy Transition" was particularly satisfying.

This is an enlightening rather than a depressing book. The editor, who writes the introductions for each section, has a good feeling for the absurd and finds humour and hope in unusual places. A message comes through not to panic, but to think. For all the absurd beliefs and ugly outlooks exposed by the various authors in this book, we find hope in unusual and unexpected places and a sense that, although answers will not necessarily come from the expected authorities, and the problems we face are extraordinary, there are ways we could slow down the crisis to a manageable pace, there are choices about the values that dictate our decisions, and politics are important.

See also: Review of The Final Energy Crisis by Mark O'Connor author of Overloading Australia (RRP AU$20) on page 8 of the December 2008 newsletter (pdf 923K) of Sustainable Population Australia, other customer reviews at amazon.com.

It is clear to me, viewing Australia's problems with addressing "growth" from viewing the U.S.'s problems in doing so, that both governmental systems are straightjacketed into the same capitalistic premise: that growth is not something to be concerned with; that promoting unlimited growth is possible.

Here's my analysis of the present U.S. presidential campaign that shows the futility of hoping a candidate for such high office will bring any kind of significant change to pursuing growth. Money and power determine their candidacy and their politics. (Although, as usual, I will vote for the one who just might bring a small amount of change, and that is in this case Obama.

Analyzing the 2008 US Presidential Election

By Richard Pelto

Television and newspaper coverage of the election process can be like entering some kind of weird third dimension. Because coverage is essentially secretarial-like rewrites of press releases, and electoral lying is given euphemistic names like "fact-challenged," or "distortion,"the average-citizen reader can only wonder what is going on.

In addition, columns adjoining coverage of the election provide superficial facts but little analysis about an economy being rapidly flushed down a toilet because of widespread excesses of greed, next to a hard-to-justify expensive military "mistakenly" raining bombs on civilians.

Most importantly missing from the journalism 2008 election coverage is how the GOP-Demo campaigns mirror each other on issues like Afghanistan, campaign finance, the death penalty, gun control, housing, immigration, stem-cell research. Only minor, tactical differences separate the two candidates on issues like health care, Iran, Georgia, social security, and taxes. On the abortion issue there is substantive difference. And Obama is now providing welcome fresh-air change of our "globalization" policy.

But even the spin-meisters of the campaigns note similarity. Tucker Bounds, a spokesman for McCain-Palin, made the case that Obama's response to the bail-out of corporate despair was derived from McCain. "Whether calling for a bipartisan oversight board or prohibitions on golden parachutes, Barack Obama is simply following in John McCain's footsteps while trying to respond to this financial crisis, as he followed in John McCain's footsteps when he attempted to respond to the recent crisis in Georgia," he said. "Again, Barack Obama has shown indecision and a lack of leadership at a time when the American people need certainty." The final sentence is representative of the mindless rhetoric that characterizes U.S. elections today.

To analyze what "change" these candidates portend we must begin with the coverage in Iowa which began with the press apparently and slavishly following whatever consistency existed in the two viable party’s electoral narrative. Iowa provided the introduction of Obama’s unquestioned repetition of "change," and, once the campaign was down to two candidates, his opponent, despite the similarities and mirroring noted above, attempted audaciously hijacking the word "change." The journalists tirelessly parrot the terms, print polls that attempt to determine which word struck a deeper chord in various age groups, and then pontificate on consistency of message and the polls’ statistical indicators, assuming apparently that the public was well-informed.

But no reporter seriously asks or presents just what "change" might mean either in an Obama presidency, or the more unfathomable "change" parroted by the GOP-nominee, John McCain. Both are "establishment" candidates, and thus both are beholden to the money/power that buttresses it.

It is a given that the public, today, for many easily-justifiable reasons, is very desirous of "change." and some forms of it is likely with Obama. It is particularly informative, then, to carefully note that Obama’s governmental prescription is similar to decades-long policy. Analysis makes clear one has to wonder how much "change" Obama would bring. On Iraq, he initially did not vote for the war’s authorization. That’s clearly different from Bush who made up journalistically sparse-questioned "facts" that led us into it. But as the many years of our occupation of Iraq passed Obama swung more and more toward Hillary Clinton’s position that an indeterminent number of troops and bases must remain there until some undefined advantageous time to pull them out. Thus, after scratching the surface, Obama’s position isn’t substantively different on Iraq nor with George W’s on the so-called "war on terrorism," especially given Obama has indicated he would aggressively pour those troops taken out of Iraq into Afghanistan and Georgia.

One must then assess the foreign policy philosophy of the candidate. Bush’s present focus on endless (and financially draining) "warring" with Islamic militancy appears to be little different from what Obama’s policy would be, given his appointment of Zbigniew Brzezinski as his chief foreign-policy advisor. This is the man who funneled large amounts of money to a wide range of Islamic fundmentalists like Osama Bin Laden in order to create more resistance to the Soviet Union, and is now advising about the Islamic-like danger posed to Israel by Iran. This "change" is decidedly minimal. In addition, another advisor, Sarah Sewall, who heads a human rights center at Harvard and is a former Defense official, wrote the introduction to General Petraeus’s Marine Corps/Army counterinsurgency handbook, the handbook that is now being used worldwide by US troops in various killing operations. Is she a likely means to "change?" Do these "advisors" help define this great "change" that Obama will bring about that the candidate and press herald?

Bush’s globalization has created much unrest and dissatisfaction because it essentially involves exporting industry to cheap labor and importing as much cheap labor as possible. So who does Obama choose to provide advice on how to change policy toward it? It’s Anthony Lake, who pledged to support a World Bank/IMF overhaul of the Haiti economy after overthrowing Aristide, which resulted in an increase in malnutrition deaths among Haitians and set the stage for the current ongoing political and ecological disaster in Haiti. Lake is a person with a long record of support for globalization. And Obama and McCain continue the globalization push to maximize illegal immigration in order to gain abundant cheap labor while pursuing an assumed unlimited growth. There’s no "leadership" or "change" involved in the Bush/McCain/Obama positions on a "comprehensive immigration reform" amnesty, except a few appearance gestures to "strengthen" the border. Neither shows any understanding at all of the population-growth consequences of additional millions of people impact on resource depletion and already dangerous ecological degradation.

Many are dissatisfied with the costs and impacts of Bush’s unconditional support of Israel. So what kind of "change" would Obama’s advisor, Dennis Ross, bring to this policy, given he pushed the principle that the legal rights of the Palestinians, the rights recognized under international law, must be subordinated to the needs of the Israeli government to expand into doing whatever they want in the occupied territories. And Ross was one of the people who, interestingly, led the political assault on former Democratic President Jimmy Carter after he wrote a recent book critical of Israel. Would he help in being an agent of "change?"

It is beyond doubt that Obama will exacerbate our present policy of unsustainably importing large numbers of illegal-immigrant cheap labor. He will undoubtedly create an even more porous border policy through his support of a variety of political measures facilitating the importation of millions of illegal immigrants. These measures incentivize immigrants' arrival by rewarding their coming here, either through amnestying the illegality of entry or providing such things as free or subsidized schooling, welfare, housing and medical care. And both candidates promulgate their immigration "changes" before activist Hispanic audiences calling for even more porous borders. Thus they make a mockery of professed concern for population-growth exacerbated problems involving the environment and growth management.

The issues not covered: too rapid population growth, rapidly receding availability of strategic resources, and ever-expanding ecological degradation, cry out for emergency "change." This is made clear by the disconnect that exists between peak oil concerns and the presidential race. As prices at the pump rise, each candidate is now talking about their so-called "solutions" to the problem. None of which seriously address population growth and its exacerbating impacts on consumption. Despite clear new warning signs from Russia, Saudi Arabia, Mexico, and Nigeria that peak oil is apparent, McCain made clear he would remain unwaveringly oblivious to the true causes of rising fuel prices, preferring initially to dwell on irrelevant—actually, counterproductive—measures like suspending the federal gas tax during the summer months or taxing Big Oil. This is akin to thinking one is curing melanoma simply by putting a band-aid on it.

Here’s, first, a quick summary of the two candidates positions on energy, and then a more extensive attempt to analyze their positions and the reasons for them.

Obama incorporates improving national energy efficiency as a central plank of energy policy, in housing and the economy overall. McCain is silent on the topic, utterly silent....Both support clean coal. Both support cap and trade. McCain supports nuclear and more drilling, Obama is silent on both....While both candidates have policies on CO2 abatement, neither even bothers to mention the more immediate, critical issues of sulfur, nitrates, and particulates in our air that cause real, measurable damage to people, plants and all other animal groups. ...Both call for more hybrid cars and electric cars, but neither provides the meaningful financing to encourage the shift to cars that are considerably more expensive than the present auto fleet.

"John McCain is energy illiterate. He's just witless about this stuff," Matt Simmons, prominent oil-industry investment banker and lifelong Republican recently stated at a conference meeting involving a dozen oil and gas men in Lafayette, La. He surprisingly added, "I'm supporting Obama." He then said, "He's just witless about this stuff. McCain says things like, 'Oh, we're going to wean ourselves off foreign oil in four years and build 45 nuclear plants by 2030.' He doesn't have a clue. Here's a man who for at least the past 15 years has strenuously, I mean strenuously, opposed offshore drilling. And now it's 'drill, drill, drill.' And he doesn't have any idea that we don't have any drilling rigs. Or that we don't have any idea of exactly where to drill."

Examining the "oil dependency" positions of the candidates' energy advisers gives us little hope our newly-elected government will meet the peak-oil challenges head-on in 2009. They are Jason Grumet for Obama and James Woolsey for McCain. Woolsey’s public comments do indicate he has at least some understanding of the peak-oil issue. But both Grumet and Woolsey say in the campaign that our "oil dependence" is a problem, and both overstate that plug-ins, flex-fuel vehicles, alternative/renewable fuels can remedy the situation. Obama's adviser serves as executive director of Washington's influential National Commission on Energy Policy (NCEP). The commission's December, 2004 report, "Ending the Energy Stalemate," tells us a lot about what the candidates' advisers are thinking about U.S. oil security. McCain's adviser James Woolsey also serves as one of the NCEP commissioners.

The principal NCEP report co-chair was John Holdren. Dr. Holdren's position on peak oil is therefore of considerable interest in so far as it appears to have influenced the views of the presidential candidates' energy advisers. The question that needs understanding is when will global production of conventional petroleum reach a peak and begin to decline, as U.S. domestic production did around 1970, and as most graphs now show has occurred since 2005. Holdren thinks peak oil is "not very important" because we need to cut our oil dependence in any case because of 1) global warming and 2) supply-side security risks.

Grumet and Woolsey’s position is exactly the same—peak oil concerns are overridden by the environmental (climate) problem and geopolitical risks to the oil supply.

Reaching this peak globally will create what is now occurring: large increases in the price of oil, plus a costly and demanding scramble for alternatives to fill the widening gap created by too-rapid population growth (especially in the U.S.) between the demand for liquid fuel and the supply of conventional petroleum.

The preponderance of evidence says that the peak of conventional oil production is occurring now whereas oil-supply optimists say it probably won’t happen until after 2030, perhaps not until after 2050. Similar arguments go on about conventional supplies of natural gas, the total recoverable resources of which are thought to be not greatly different, in terms of energy content, from those of crude petroleum.

It is clear that the U.S.’s present heavy oil dependence carries substantial economic and political risks in a world where high proportions of the reserves and remaining recoverable resources lie in regions that are unstable and/or controlled by authoritarian governments that have sometimes been inclined to wield oil supply as a weapon. It’s also clear that world oil use is a huge producer of conventional air pollutants, as well as being about equal to coal burning as a contributor to the global buildup of the heat-trapping gas CO2. Given these liabilities, it makes sense to be looking urgently for ways to reduce oil dependence no matter when we think peak oil might occur under business as usual.

A "climate first, peak oil not" view dominates mainstream thinking in Washington, but neither Dr. Holdren, or the presidential advisers say anything appreciative of the importance of the timing of the peak.

In a Mary O’Driscoll interview, Grumet reacted to a question about peak-oil impact, "We were intent, Mary, on not having kind of a Robert Ludlow dirty bomb, you know, airplanes into cooling towers. I mean what we looked at was a number of very, unfortunate, but very realistic events. Civil unrest in Nigeria; unfortunately life is imitating art. I mean we're seeing that now reported in newspapers, coupled with some low-tech terrorism. We looked at al Qaeda hijacking a tanker and crashing it into the Port of Valdez, and at a major explosion at a natural gas facility in Saudi Arabia, which would have taken natural gas off the market requiring them to use crude oil to replace their own domestic energy. And then some terrorism that just caused a real anxiety among the oil producers in Saudi Arabia. You put all that together, you take 3-and-a-half million barrels off the market and let me read to you from my cheat sheet of doom; gasoline prices at $5.74 a gallon, global oil price at $161 a barrel, a recession, two consecutive quarters of a drop in GDP, a drop in consumer confidence by 30 percent, inflation 12.6 percent, a 28 percent decline in the S and P 500, as well as I think some very realistic foreign policy concerns... " Thus rather than focus on peak-oil likelihood and impact, he connects oil dependency with the so-called war on terrorism.

Later Grumet was asked this question by Mary O'Driscoll: Well then, what do we do in the short term?

Jason Grumet: We eat it. I mean this is the reality that I think we were hoping to reveal. You know when the national commission put out its report last December the number one priority issue that we addressed was the need to deal with domestic oil security. I think that we have -- the SPRO is a significant buffer. It's very good news that our economy uses about half as much oil to produce the same GDP now as we did before the first oil embargo. So we are in a better position in some regards than we were before, but we use 25 percent of the world's oil. We possess 3 percent of the world's reserves and we are fundamentally now in a system that is stretched so thin ... now if it wasn't civil unrest in Nigeria it could've been a labor strike in Venezuela. I mean these are very real risks and the answer is prices go up.

Mary O'Driscoll: Right.

Jason Grumet: And we probably wind up using our SUVs a little bit less and saying to ourselves, why hadn't government done something to protect us from this?

Mary O'Driscoll: But I mean you're talking about a recession kind of situation, so I mean will we even be able to drive our SUVs at that time? I mean it's a little unnerving I must say.

Jason Grumet: I did see, I saw the Mad Max movie over the weekend and it kind of prepared me for the realities of $160 a barrel oil.

Mary O'Driscoll: Oh boy!

Jason Grumet: These are career-ending prices for many people in this town [Washington] and I think that, our hope is that collectively the Congress and the administration will start to see that not only do we have to work on these issues as matters of national energy policy, that these are issues of national security, economic strength and our foreign policy prerogative.

It is apparent that Grumet fears the potential effects of a sudden withdrawal of 3.5 million barrels per day (mmb/d) from the world market, and he notes that this would result in "gasoline prices at $5.74 a gallon, global oil price at $161 a barrel, a recession, two consecutive quarters of a drop in GDP, a drop in consumer confidence by 30 percent, inflation 12.6 percent, a 28 percent decline in the S and P 500."

At the end of 2004, the EIA data indicates that world oil production (crude + condensate + gas liquids) stood at 79.905 mmb/d. Grumet doesn’t note that at only 1% annual growth, which is below the historical average since 1983, the average daily oil supply for 2007 should have been 82.326 mmb/d. What was it? Supply stood at 81.190 mmb/d, a shortfall of 1.136 million barrels with respect to the modest 1% growth target. The biggest producer, Saudi Arabia, had basically flat-line production despite repeated promises of increasing production. Most of the "growth" that did occur was in gas liquids, which are not used as a transportation fuel. This has not been a sudden oil shock, but rather forms part of a gradual ongoing oil crunch that some call "peak oil."

Thus, neither Jason Grumet or James Woolsey are completely uninformed about potential oil shocks, but they appear to be very badly informed about the ever-accelerating peak oil squeeze resulting from politically-encouraged population growth mostly in the U.S. but also to a lesser degree in Europe.

The energy plan of Barack Obama generally follows the following NEPC guidelines:

• Increasing and diversifying world oil production while expanding the global network of strategic petroleum reserves.
• Significantly raising federal fuel economy standards for cars and light trucks while reforming the 30-year-old Corporate Average Fuel Economy (CAFE) program to allow more flexibility and reduce compliance costs. New standards should be phased in over a five-year period beginning no later than 2010.
• Providing $3 billion over ten years in manufacturer and consumer incentives to encourage domestic production and boost sales of efficient hybrid and advanced diesel vehicles.

"Increasing and diversifying world oil production" obviously did not happen, and it's unlikely to happen. New CAFE standards were enacted in the Energy Independence and Security Act (HR. 6) signed into law in December, 2007, but are belatedly to be phased in by 2020. The NCEP report also advocated ramping up alternative fuels like ethanol to "help to diminish U.S. vulnerability to high oil prices and oil supply disruptions while reducing the transportation sector’s greenhouse gas emissions." Unforeseen cost consequences of this policy soon became apparent, along with its dimunitive impact on our reliance on oil.

Obama’s plan now is to cut oil imports by setting tough new fuel-efficiency standards for cars and trucks and providing retooling assistance to the automakers to help them meet these standards. Also by increasing biofuels production and improving the efficiency of industrial oil use. All these measures would have been undoubtedly helpful 10 years or more ago, but the continuing systemic-growth push mandates (that both Obama and McCain support, or at least seem oblivious of its consequences) means that the industrial cliff is now higher and the gravity pull of peak-oil consequences is much greater.

Obama’s energy-solution steps provide too little help coming too late, an observation which becomes more and more obvious when we consider that a global food crisis is happening at the same time a strategic commodity-availability scarcity is now apparent, and the price of oil recently soared above $140/barrel. Instead of addressing the consequences of peak oil, the candidates are intent on pursuing a politically-correct policy of mitigating anthropogenic climate change so their primary energy initiative is a carbon emissions cap and trade system. This scenario makes problems arising from our oil dependency take a backseat—because they are not perceived as urgent. This approach to our "oil dependency" only makes sense from a climate perspective, which requires us to change our energy consumption and infrastructure over several decades.

The soaring oil price and its underlying causes are the invisible elephant in the room in the presidential race. While many of the candidates' proposals can be chalked up to pandering in an election year, there is no evidence that the candidates get this "peak oil" problem. As the first DOE secretary James Schlesinger said, "We have only two modes—complacency and panic." Complacency rules, and panic awaits and one doesn’t have to be a soothsayer to foresee that anxious day when our leader-to-be exclaims, "Oh, no! Oil is $161/barrel! The economy is falling apart! What do we do now?" This will be similar to the George Bush/Paulson belated decision to institute a public-financed bail out of a suddenly DOA-subprime economy as a last-minute response to a potential disaster.

Of course there is always a range of opinion involved in politics. Even within a political party. Here’s the Democratic Left’s take on Obama: He opposed Rep. John Murtha’s call for immediate withdrawal from Iraq and supported continued funding for the war. He voted in July 2005 to reauthorize the Patriot Act. He did not support an amendment that was part of a bankruptcy bill that would have capped credit card interest rates at 30 percent. He opposed a bill that would have reformed the notorious Mining Law of 1872, which allows mineral companies to rape federal land for profit. He did not back the single-payer health care bill , sponsored by Kucinich and John Conyers. He advocates the death penalty and nuclear power. He backed the class-action "reform" bill—the Class Action Fairness Act (CAFA)—that was part of a large lobbying effort by financial firms, which make up Obama’s second-biggest single bloc of donors. CAFA would effectively shut down state courts as a venue to hear most class-action lawsuits. Workers, under CAFA, would no longer have redress in many of the courts where these cases have a chance of defying powerful corporations. CAFA moves these cases into corporate-friendly federal courts dominated by Republican judges. And history may note that Obama’s support for the bailout was his most egregious act of all.

Maybe the most important point on which to judge the candidates is how they will steer our relationship with China. Barack Obama referred to China's recent space walk as a sign that it was catching up while America floundered. John McCain, attacking waste in Washington, said: "We owe China $500 billion." Mr Obama went one better, saying (more accurately) China "now holds $1,000 billion of our national debt". Linking finance with power, he added: "There has never been a country on earth that saw its economy decline and yet maintained its military superiority." The best that can be said about those comments is that they show both candidates being careful about what they say.

The lesson? Change is definitely needed, but too long-delayed change may have unforeseen consequences. And the Bush Administration’s last-minute economic moves to institute socialism for the rich and capitalism for everyone else makes clear even long-repeated dogma can get thrown out the window, given this government bailout was contrary to the republican party’s long-enduring public statements of non-governmental "interference" in the economy, which may or may not be an indictor of just how desperate the decision-making process was in this process.

Serious exigencies are in the offing. Thus journalists have a serious responsibility to report and present information that will allow voters to cast an informed vote. In order for that to occur better journalism and more analysis by the electorate must occur if we are not to be saddled with a similar eight years of Bush miserable leadership most polls show we now do desperately hope to "change." It is clear that McCain is more of a "Bush Junior" on military and neo-con influenced foreign policy abroad then Obama is, but it is clear the latter is a close second. And both candidates would continue present porous, population-growth immigration policy which exacerbates all our problems, while not being frank or realistic about energy policy. It is clear the momentum toward unsustainability consequences will continue regardless of which candidate wins. And unquestioning reporting probably helped cause Obama and McCain, who are in too many ways more of a Bush "shadow" than a Bush alternative, to be the present, active, viable candidates. That makes clear the system determines the political process, and it is probably important to understand "you can’t buck the system."

This is making one thing crystal clear: It is clearly time to assemble the best possible parachute.

See also: An immigration policy bought and paid for? of 24 Feb 08 by Tim Murray, Obama's Chicago Boys of 12  Jun 08 by Naomi Klein.

(Illustration adapted from Goya's Saturn devouring his children)
[Note: This article was updated on 12 Oct 08 with S&P Graph]

#AreWeThere" id="AreWeThere">Are we there yet?

Global decline in total fuel available should manifest in reduction of total global economic activity.

Does the stock-market sector decline represent a reaction to decline in total economic activity resulting from high oil prices?

(Source is "Oil Price History and Analysis," WTRG Economics' Energy Economist Newsletter, www.wtrg.com/prices.htm. Prices are in 2006 dollars.)

The Dot Com led bubble in the stock market topped in early 2000 then fell pretty much continuously until 2003. Between 2000 and 2003, the market lost approximately 45%. In early 2003, Enron and Worldcom made the global market look as if it was really unraveling. Things looked so grim over 2000-2003 that everyone was very pessimistic. Oil prices had also begun to climb in 2000, but remained well below the levels of 1973 and 1979 oil shocks and dirt cheap compared to prices in 2008. (See diagram). It has also been suggested [1] that the Year 2K preparations had temporarily boosted the popularity of Dot Coms.

On the eve of the Iraq invasion the stock market reached bottom. When the US invaded Iraq, it bounced back.

(Historical NASDAQ composite graph adapted from www.nationmaster.com/encyclopedia/Nasdaq-Composite)

The speculative "dot-com bubble" in information technology over 1995-2001, with its spectacular correction made its former status seem so obviously artificial, that it was expected that the share market would return to more real trading volumes. Instead the market doubled between 2001 and 2006, equivalent to 14% compound interest in that time.

#PropertyBubble" id="PropertyBubble">Property Bubble

Much of this 2001-2006 bubble was predicated on
a) inflated land values which relied on a bull property development market, incorporating new suburbs, new shopping complexes, new roads, and population growth to fuel demand
b) cheap commodities (oil and materials)

The ‘boom’ in property development increased demand for materials and oil, but oil production barely increased at all. So, prices went up. They went up robustly for materials, but they increased spectacularly for oil, as well as increasing for every other form of fuel, energy and electricity – including, coal, gas and uranium.

When fuel and materials prices rose, the margin for profit in property development dropped. One of the ways that industry tends to mitigate the rising cost of fuel and materials is by reducing the cost of labour. Unfortunately, having converted a huge part of the economy to land speculation based on property development, wage reduction had to result in reduction of consumption of property as a commodity, notable by desperate lending and debt repackaging, which accelerated mortgage defaults.

#StockMarket" id="StockMarket">Stock market sound and fury signifying nothing?

The stock-market is an institution which can only survive on an economic surplus sufficient to support the fees it takes from investments. Whilst economic activity, much of it in the property development industry, was growing by up to 14%, fees of 1-3% seemed wearable and the size of the stock market industry grew just like the size of the real-estate industry did with the globalization and acceleration of land-transactions, assisted by new debt-packaging ‘commodities’ like sub primes. But, if real economic activity drops to 2-3% or below, such fees are untenable. To continue to exist in its current size and draw those kinds of fees, or any fees at all, the stock market must radically downsize.

Is what we are seeing in part the cutting back of personnel, agencies and activities in this sector itself?

#HowLow" id="HowLow">How low can the level of economic activities go?

If economic activity is only responding to short-term price variations in a bear market, rather than to total global petroleum limits, then we might expect market indicators in general to continue to see-saw and prices to see-saw. If it is responding to long-term depletion then the level should begin to see-saw between lower and lower parameters since economic activity will not be able to recover in the forseeable future. Any fuels called in to replace petroleum oil and gas will lack that crucial adaptability to our wheeled and air-transport dependent economy. Any developing new technologies for transport will require new infrastructures on a scale which will be difficult and probably impossible to provide without the vast petroleum reserves that the economy has depended on since WW2

#OilPeakWas1979" id="OilPeakWas1979">Global per capita oil peak was 1979

Oil production has not been keeping up with population growth since 1979 and there are signs that it may not be keeping up with economic activity either. There has been widespread belief – the ‘dematerialisation theory’- that the economy became less dependent on oil and other energy since the 1970s oil shocks and so had increased economic production despite declining increase in oil production.[2]

#decoupling" id="decoupling">Does increased efficiency really mean economic ‘decoupling’ from energy?

It is true that industry became less profligate in its use of energy and that real mechanical and technological efficiencies were achieved. A case can also be made that developed economies reduced the amount of fuel calories/joules they used per unit of production since 1973. There is however little or no real evidence to support the idea that using fewer fuel joules amounts to getting more work from less energy.

Investigation indicates that, in reality, industries began to be more careful about the kinds and forms of fuel they used for production, instead of just using any fuel for any operation. Calories and joules in themselves do not accurately reflect the real usefulness of different fuels. Adaptability of particular fuels to different kinds of production is crucial.[2]

Thus, as oil became more costly, we mostly stopped burning it in our home heaters and turned to coal, because coal could immediately be adapted for heating or electricity creation, but not so easily adapted to drive cars and planes. Because oil was immediately available to drive cars and fly planes, it was largely reserved for wheeled and air transport. An early exception to this rule was South Africa when oil was not available due to political embargos, and so oil was made from coal despite huge energy costs entailed by coal liquefaction. No doubt the slave labour conditions in South Africa assisted the economy to adapt.

We now see many more examples of this costly production of synthetic oil from coal, simply because the cost and supply of petroleum is increasingly problematic. China has been making oil from coal for several years now and Australia and other countries are also encouraging investment in this technology. It is not that the process of turning coal to oil has become substantially more efficient, it is that our expectations for economic production have diminished, although governments still rarely admit this. The effect of producing oil from coal will be higher cost for all industrial production using this coal-oil and a reduction in the amount, rate and profit margin of industrial production. As in South Africa, economies newly resorting to coal-oil will rely on reducing the cost of labour in production.

#ResourceAllocation" id="ResourceAllocation">Allocation of resources; wealth and fuel distribution

There was actually a global decline in economic growth from 1973 onwards, but first-world countries did not register this because access to fuels and energy was privileged for them and blocked for third world populations. So it was possible for many of us in the so-called developed economies to believe that there had been a complete recovery from the 1973 and 1979 oil shocks.[2]

Those of us who looked seriously at the decline in living standards, quality of life, ecological health, democracy and political stability in the third world were less confident in the façade of business as usual. Recently signs of similar declines in standards are apparent in the first world.

#OilDepletion" id="OilDepletion">Oil depletion back on the intellectual radar

When the concept of peak oil came back on the radar, especially via groups like Jay Hanson’s energyresources [ AT ] yahoogroups.org in the late 1990s, people who had been aware of the 1973 oil shock were ready to investigate Hubbert Peak calculations of timing of world oil peak and depletion and to look out for market and other signals of peak production not meeting human economic and population demands.

#relationship" id="relationship">Relationship between prices, depletion and demand

Oil prices are often interpreted as an indicator of geological depletion, but they are not reliable in the short term because speculation may drive these prices up, higher costs may cause short term increases in production because more money is available for production, and higher costs will reduce demand for oil, which will eventually cause oil-sellers to lower their prices.

It was generally felt that oil prices in an era of true geological depletion would follow a zig-zag course of supply and demand responses, where high prices would result in what is known as ‘demand destruction’, but would rise again as necessity reasserted demand.

Eventually oil would become a precious fuel and all those things in our economies which formerly relied upon oil would cease to exist except perhaps in some relic industrial communities which might manage to retain strategic access to remaining reserves.

The situation with the ‘First World’ since 1973 and 1979 could represent an early version of such a relic community monopolizing remaining reserves. The method of monopolization could be identified as market sequestration via currency manipulation. Having a currency equal to US dollars, OPEC standard currency from 1974, became the test for inclusion in the monopolizing countries. Oil became very expensive for any country whose currency was of low value vis a vis the USD.

Ironically Russia, which was the first developed country to fall below this access standard, now dominates considerable, if declining, oil and gas reserves, and the US, whose enormous reserves began to decline in the early 1970s, now roams the world in growing desperation, seeking to dominate other peoples’ reserves. Now with its dollar also losing sway, its capacity to monopolise oil reserves via currency domination looks increasingly moot..

#IsOilSupplyAdequate" id="IsOilSupplyAdequate">Are high oil prices an indicator that total oil supply is now not adequate to keep total world economic activity going at its recent rate?

C.J. Cleveland, R.K. Kaufmann, and D.I. Stern's research cited in [3] seemed to show clearly that fuel prices were closely aligned with the economic productivity of the uses they were put to. Expensive petroleum fuels are associated with the most productive industries. This would suggest that as petroleum prices rise there will not be much room for real adjustment by these industries. Passing on the costs to the consumer will result in 'demand reduction', which will result in a slowing of the economy and a smaller stock market index score. Basically, less petroleum means a smaller, slower economy.

The US and other countries' attempts to throw money at the banks in order to induce them to lend for renewed investment are made in the hope that the money will cause a response. Is the absence of response an indication that the banks cannot find any good investments to place? A failure to respond to this credit stimulus may signify that we really have reached a nexus of oil reserves and economic margins, meaning that continuous economic growth and material progress are now things of the past.

#WhatToDo" id="WhatToDo">What to do?

What slack remains in our economic system?

Time.

The pace of economic transactions now requires specialised industries and staff to keep up with. Ordinary people and processes cannot deal with the pace and impact of economic growthism on their environments. Governments have sacrificed democratic engagement to laissez-faire economics because they lack the manpower and time to dedicate parliaments to monitoring and controlling the rate of human engineered material change and disturbance. The languishing world property markets reached extremes of market propulsion before their current collapse.

A slowing down of the economy would be a godsend, but only if we adapt democratically to it.

We can adapt to a smaller, slower economy by forgiving debt, relocalising economies, and working and producing less material things. Operations on a large scale, such as internationally, including telecommunications and travel, should probably become the province of governments to operate, subject to democratic controls. A new, slow and smaller economy cannot afford massive property development just for the sake of cash profits, and it would have to relinquish the daily importation of food and materials from impoverished countries for continuous hectic economic activity. It would have to adapt to local supplies for most things.[4] Population policies, instead of encouraging rapid growth, would need to take advantage of the natural tendency to rein in growth when economic indicators clearly predict shrinking opportunity. We could take advantage of the aging population to slow down activity, anchor communities, and reduce demand. Instead of attempting to replace age with youth through high immigration, we can look forward to the passing of the babyboom through the Australia's demographic intestine and plan for an overall much smaller population.

One thing is for sure, we need a change in political elites, and by that I mean a change in CEOs and mainstream media owners, just as much as in all levels of government. We have been ruled by an elite with an uncritical faith in a reality-divorced notion of continuous economic growth and coasian cash economics. They are not equal to the task of adapting to thermodynamic realities and the system they support disregards serious input from any citizen not endorsed by their own corporate mediatocracy.

#Australia" id="Australia">Australia:

Any Australian having read Wizard Home Loans/Malcolm Turnbull's contribution to the Housing Affordability Inquiry should realise that the much touted genius of Turnbull is only an eidetic reflection of the kind of progress ideology and cash paradigm on which the financial community has pinned its successful ploy for total deregulation, privatisation and ecological vandalism on a grand scale. The opposition offers little or no relief in this leader to our current problems.

Further questions to be answered are: What is the relationship between NASDAQ, Dow Jones, the Australian All Ordinaries, the Hang Seng, FTSE and other stock market measures and total global economic activity?

Contributions to candobetter.org on this and other aspects of the global credit crisis are welcome. Submit them to the “Comments” here or send them to james [ AT ] candobetter org or sheila [ AT ] candobetter org and we will consider publishing them on the front page.

REFERENCES:

Acknowledgement: Thanks to Ilan Goldman for help in describing the recent gains and losses on the market. Thanks to Quark for help with better graph data.

[1] en.wikipedia.org/wiki/Dot-com_bubble (Accessed 8-10-08)

[2] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing A. Maddison, Monitoring the World Economy 1820–1992, OECD, Paris, 2000.

[3] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing C.J. Cleveland, R.K. Kaufmann, and D.I. Stern, “Aggregation and the Role of Energy in the Economy,” Ecological Economics, vol. 32, issue 2 (2000),
pp. 301–17

[4] Sheila Newman, “101 Views from Hubbert’s Peak” in The Final Energy Crisis, 2nd Edition, Pluto Press, 2008, citing Clive Hamilton, Growth Fetish, Allen & Unwin, Australia, 2003; Pluto Press, London, 2005, last chapter, especially, pp. 218–20:

Relocalization is obviously the best way to develop the solidarity and self-suffi ciency to reorganize work.

Political commentator and climate activist Clive Hamilton writes in Growth Fetish,
"Reduction in working hours is the core demand for the transition to postgrowth society. Overwork not only propels overconsumption but is the cause of severe social dysfunction, with ramifi cations for physical and psychological health as well as family and community life. The natural solution to this is the redistribution of work, a process that could benefit both the unemployed and the overworked."

He remarks that “Moves to limit overwork … directly confront the obsession with growth at all costs,” and talks about the liberation of workers “from the compulsion to earn more than they need.”

Because growth is sustained by a constant “barrage of marketing and advertising” Hamilton wants advertising taxed and removed from the public domain, and television broadcast hours limited so as to “allow people to cultivate their relationships, especially with children.”

The Biosphere and the Lithosphere

Humans live in and from the biosphere. But in the first decade of the
21st Century, 85 percent of the primary energy consumed by the 6.7
billion humans comes from the lithosphere.

About 40 percent of this energy is oil. Another 40 percent comes from
natural gas and coal, and 6 percent more is from uranium.

This represents close to 10 billion tons of oil equivalent, extracted
every year from below ground.

The Technosphere

The technosphere, that recent human creation, transforms the
biosphere, with the extraction, transformation, and transport of
useful materials from the Earth crust at a rate of about 33 billion
tons per year. In addition, about 36 billion tons of the accompanying
ores and some 30 billion tons of earth crust cover are extracted. In
total, the 11 billion tons of equivalent oil of primary energy are
needed every year to extract, transform and transport about 100
billion tons of materials, including the energy materials themselves.
Without that energy, these movements will not be possible. With
decreasing energy supplies, the extraction of materials and the
related services will decrease accordingly.

Nature of this sphere

Being a sphere, the Planet is limited in size. It is obvious,but in
this world needs to be continuously emphasized, that the resources
contained in it are also limited. Geologists in general and the ASPO
community in particular, know very well that the extraction of
resources from the lithosphere is subject to a given pattern that
limits and shapes the extraction rates. It has, more or less, the
form of a bell shaped curve, shown in its logo. It is the Hubbert
curve. Even admitting that the shape of the curve may drift apart in
some cases, from the theoretical one, due to social causes, the
principle is out of question.

Resource peaks and energy flows

And some of us feel that we are reaching the oil peak in our ascent,
and other neighbouring peaks as well, even the present financial
storms and other geopolitical clouds may disguise that cordillera, as
exclusively a monetary problem.

Then, it is a question of flows, diminishing flows, rather than the
end of oil or gas. It is a physical and geological issue, rather than
an economic one. Pouring more paper money into the markets will not
help to realize where we are. Those present frentic movements very
much resemble the classic film scenes of thieves throwing and
dispersing the bank notes of the loot in the middle of a crowd, to
create a momentary convulsion and thus, trying to escape from the
police, while keeping a couple of rolls in the pockets.

Limits of human economics

As M. King Hubbert said: `There's no monetary mechanism in existence
that can find oil that God didn't put there and the price isn't going
to increase that amount of oil'. The same can be applied for all
other materials that humans demand today in increasing amounts.

And there is a clear evidence that global economic growth and global
energy consumption run parallel and are very directly related,
despite some anomalies in specific countries, which claim
improvements in efficiency, in the GPD/Unit of product or service
ratio, while diverting and outsourcing the burden to third countries
o regions. Technology improvements and higher financial investments
help to delay the peak or plateau of the bell curve or reshape it,
but can neither fight the reality of gradual depletion.

There are also clear indicators that greenhouse and other gas
emissions are also directly related to the fossil fuels, extracted
from the lithosphere and burnt to provide goods and ser-vices to
society.

However, classical economists still work, think and behave as if they
lived on a flat Earth with limitless resources to be made available
by Man's ingenuity and market forces.

Very serious issues are at stake caused by the growing gap between
the available fuel supply, which is subject to natural depletion and
the ever growing demand implied by classical economic theory.

Future survival

In the same way as a seed takes time to emerge from the ground and
form a plant, we will soon have to face the paradox and the dilemma
of returning to the biosphere and its resources for survival, and
rely more and more on renewable energy resources above ground.

The Sun projects onto the Earth some 8,500 times more primary energy
than we consume, but it is, again, rather than a question of volumes,
a matter of flows and feasible energy capture rates of this as
beautiful as dispersed energy.

We urgently need to determine the extent to which we can maintain the
present socio-political and technological environment with more of
the renewable energy resources from the biosphere and less from the
lithosphere, by using the human ingenuity and technology; or by
reshaping our way of living; or perhaps and better, a wise
combination of both.

Seventh ASPO International conference in Barcelona, 20-21 October 2008

We will be analyzing and discussing all these important questions in
detail in the 7th. ASPO (Association for the Study of Peak Oil and Gas) International Conference at the World Trade Center in Barcelona, Spain, on October 20th and 21st.

See the Official program (pdf file) "From Below Ground to Above Ground"

Join us by registering here

For questions and contacts, please address to spain[at]telefonica.net>

For more information http://www.aspo-spain.org/aspo7

Welcome to Barcelona.

Article by Pedro from Madrid, subtitled by Sheila Newman for candobetter.org

Those Australians uncorrupted by the ubiquitous US media, are gobsmacked by the utter tastelessness that passes as attractive in US presidential candidates. Sarah Palin, the latest republican candidate for USA Vice President, epitomises this trend.

Championing selected human rights, apparently prepared to sacrifice her own daughter to a public shot-gun marriage, she seems like a high-tech cartoon of a religious reactionary. It is chilling to realise that the violent religious right are among the few which the press and corporations want to motivate to vote in the US client state. The rest of the American voters are largely kept very bored with the notion of exerting some say in their own fates.

Not just tasteless; malice and stupidity caught on film:

I was bemused, impotent - until I saw this film. Then I realised how bad Sarah Palin must be, how bad the US situation must be - politically and for wild as well as domesticated species - tortured and harassed the way they were in Roman circuses and for the same political ends.

This three minute video about Sarah Palin's appallingly cruel record on wildlife also tells us about the beautiful Alaskan wilderness.

A rare chance to speak up for wildlife and be heard world-wide

The world is watching Sarah Palin.
Please don't give into apathy here, because the high profile of this ignorant woman, gives those of us with an ounce of decency, an opportunity at world-wide level, to show the US Republicans that shooting animals whose habitat is already beseiged by US overpopulation and economic greed - for sport - goes way beyond the bounds of decency.

The situation and the values appear to be quite depraved. The bible bashing that accompanies this grand-scale human bullying is nauseating and frightening. How widespread is this emotionally blunted contempt for nature and blindness to beauty or compassion in the mainstream religions?

Time now for religious leaders to rise up and condemn and ostracise this woman and the entire party which endorses her, or forever be condemned by their already long record of silence on such things.

On top of her apparent absence of normal compassion, this woman who according to my values is insane, actually models the brutal execution of wildlife using technologically intensive weaponry from petroleum-guzzling small airplanes. This is frightening ignorance of here and now petroleum costs and scarcity in a world where the US has actually gone to war for more petroleum. This is oil-profligacy in a political context where even her own party is advocating reducing foreign oil dependency. For every drop of oil, how many drops of human and other blood and sap in our turbo-vandalised natural world?

Is Right to Life a political mechanism to draw energy from reasonable people?

It makes you wonder if Right to Life is just an impossibly confusing, diabolically effective smokescreen to cover up total immorality, utter selfishness, blind, driving ambition, compulsive wastefulness and money-worship in the US political Right. Are the religious right of the Republicans its moral orcs?

Big money that endorses Republican cruelty should withdraw it or face consumer consequences

And, for those of us who spend nearly all our lives fighting against the needless, heart-breaking suffering which proceeds at an industrial rate, how appalling is the information that big money backs this suffering and keeps it accelerating and amplifying. If that money were to be taken from Sarah Palin and the Republican Party which has endorsed such unspeakable acts, how much kinder, overnight, the world would become.

I hope that someone will write an article about those organisations which have funded Palin and the Republicans so that we on candobetter can name their CEOs and associate them with these deeds.

Like a gothic fairy-tale

Sarah Palin is actually the Governor of Alaska. For more about this woman and for a very interesting comparison of economic benefits of passive wildlife observation vs violent rampaging and Palin's lack of interest in the first, have a look at this Alaskan website, Grizzly Bay Org. According to Grizzlybayorg, her parents guided her values in this.

Photo-source: http://www.grizzlybay.org/SarahPalinInfoPage.htm

It seems like a bad fairy-tale, doesn't it?

Roger Schlickeisen, of Defenders of Wildlife Action Fund, writes that acceptance by Sarah Palin of the Republican nomination for Vice President puts her second in line to be President of the United States. He says that he needs help "... to let America know where she stands on the brutal and needless aerial hunting of wolves and bears. He asks that people "Watch our new video on Palin’s awful record and share it with everyone you know who cares about wildlife." He warns that the "video is extremely disturbing. It contains graphic images of aerial hunting of wolves," and he adds that this is "a brutal and needless practice that Governor Palin has fought hard to promote and expand."

Palin targets wolves and bears from aircraft; offers costly bounties

Schlickeisen states that, "Despite strong scientific, ethical and public opposition to aerial hunting, Governor Palin has:

* Proposed paying a $150 bounty for the left foreleg of each dead wolf.
* Approved a $400,000 state-funded propaganda campaign to promote aerial hunting.
* Introduced legislation to make it even easier to use aircraft to hunt wolves and bears."

He asks, and I reiterate, "If you care about wildlife, please watch this video right now -- and then share it with every friend, neighbor, conservationist and wildlife lover you know."

Please share this video

"Please also share our video on blogs, social networks and elsewhere. I’ve pasted the link to the video below to help you spread the word: http://actionfund.defenders.org/palinvideo "

Original source of information about the film was 4-9-08 : Rodger Schlickeisen, President of Defenders of Wildlife Action Fund: Subject: Video: Sarah Palin's Shameful Record on Wolves

Defenders of Wildlife Action Fund
Defenders of Wildlife Action Fund provides a powerful voice in Washington to Americans who value our conservation heritage. Through grassroots lobbying, issue advocacy and political campaigns, the Action Fund champions those laws and lawmakers that protect wildlife and wild places while working against those that do them harm.

Defenders of Wildlife Action Fund can be contacted at:
1130 17th Street, NW
Washington, DC 20036
or at www.defendersactionfund.org

See also:
Alaska Governor Sarah Palin Wins 2008 Rubber Dodo Award in biologicaldiversity.org of 17 Sep 08, Sarah Palin's record on environment is abysmal in seattlepi.nwsource.com of 5 Sep 08 by Rick Steiner and readers' comments,
New Orleans: The City That Won't Be Ignored in The Nation of 3 Sep 08 by Naomi Klein. How Democrat Barack Obama has incredibly surrendered critical ground to McCain in New Orleans, in which the the Rebublican Bush administration scandalously mismanaged the relief effort following Hurricane Katrina in 2005.

One impact of Georgia's nose-thumbing Russia has been for the US and Europe to take a step backwards, away from it. This leaves Georgia, not only vulnerable to a Russian take-over, but it also frees Georgia to succumb to Russia.

See also: Russia Never Wanted a War by Mihkail Gorbachev in New York Times of 19 Aug 08 for a view critical of Georgia's role in the conflict.

The US invasion of Iraq was identified by many oil 'peakniks' as the first of the oil depletion wars. Hostilities around Ossetia between Georgia and Russia, identify this region as the second of the oil depletion warzones.

The World’s longest oil pipeline runs through Georgia

Illustration source: http://www.american.edu/ted/ice/ossetia.htm
South Ossetia is a Georgian state, north of Tbilisi, Georgia, where the world's longest oil pipeline - the Baku-Tbilisi-Ceyhan (BTC) pipeline - runs through on its politically and geographically circuitous route to the Mediterranean from the Caspian Sea. The Caspian Sea is the largest closed body of water in an ancient fiery region full of legend, bordering central Asia. It is also an international wildlife preserve,[1] with many threatened species, including the near-extinct Caspian sturgeon (source of caviar and little sturgeons).

(Photo of Caspian Seal from Wikipedia)

The entire pipeline is underground and fascinatingly high-tech,[2] to cope with the climate, seismic, and gravity features of the regions it tunnels through as well as the high wax content of the oil. It is patrolled by US trained Georgian soldiers. [2] The crude comes from the Azeri-Chirag-Gunashli oil field in the Caspian Sea, which has slowly been coming on line since 2005 with Gunashli only beginning production in May 2008.

There has been for a long time conflict as to whether the inland body of water known as the Caspian Sea is a sea or a lake. The political difference is that, if it is a lake, then the hydrocarbons (oils and gases) it produces belong to the countries bordering its shores. These are, clockwise from the port of Baku: Azerbaijan, Russia, Kazakhstan, Turkmenistan, and Iran. If it is a sea, however, such products are divided up by median lines.

Caspian oil and gas

Much has been hoped for from the Caspian's oil and gas reserves.

Their location, however, for many reasons, makes profitable oil extraction especially difficult and probably impossible in many cases.

Source: http://www.martinhovland.com/mud_volcanoes_files/garadag2.jpg
The highest density of mud volcanoes occurs in Azerebaijan and in the Caspian Sea

Conditions make the region sound like a strange and hostile planet, scorching in summer and frigid in winter. Caspian oil has a super-dangerous high sulphur content which means that workers need to wear oxygen tanks to avoid hydrogen sulphide during exploration and extraction. The water is often ice-bound. The winter climate, as well as wet and freezing, is stormy with severe winds. The site of the most important oil reserves off Kazakhstan, in Kashagan field, are located in shallow water which is hard to navigate, and the deposits are in pockets, inconveniently separated by rock layers, 4.02 km or 2.5 miles below the seabed at pressures around 500 times sea level. It has been necessary to build special platforms and equipment. An offshore gas platform and plant for Stage 2 of the Shah Deniz project was costed at $10 billion plus.

Even if the reserves in the Caspian do prove to be huge, and it becomes possible to extract a good portion, the amount of petroleum and other fuels and materials expended in order to do so mean that the margin for profit is much smaller than with wells in the past. This is just one of the reasons why oil is becoming so dear; the easy to get supplies were taken first; now only obscure and difficult deposits remain. On top of this, demand for an ultimately finite supply is rising daily along with population numbers and economic activity.

Geopolitics

Although it is true that the pipeline avoids "using tanker transport along the Black Sea and the highly congested Bosporus, "[2] which a shorter pipeline through Russia would have led to, other, more political reasons, have been highlighted by the August Georgia-Russian confrontation.

It is largely these political associations which caused the pipeline to be much longer than it might have been, adding an estimated $3.20 per barrel to the cost of transporting the oil.[2]

Russia is the big power in the area, yet it has been left out of the pipeline in question. What is more, there are several more pipelines in the … um… pipeline and none of them involve Russia. Prior to this one there was the Baku-Supsa pipeline, which transports oil from Azerbaijan to the Black Sea coast of Georgia. Sohbut Kabuz reports that there is a preliminary agreement for construction of a pipeline to ‘connect Romania's Konstanza port to Italy's port of Trieste.” There is another planned to link Ukraine's Odessa-Brodi pipeline to Poland's Gdansk port in the Baltic Sea, and another to transport Azerbaijani and Turkmen natural gas to Europe via Romania and Ukraine. “All give key roles to Georgia,” Kabuz says. [3]

But Russia obviously believes that the countries around the Caspian, and their product, should be within its hegemony. Unsurprisingly, it is suspicious of US 'democracy' missions and gifts and influence in the area. The Baku-Tbilisi-Ceyhan pipeline is not just an insulting symbol, it is actually siphoning oil out of the area beyond the reach of Russian taxes, and more like this are planned.[3]

Logically, a pipeline through Russia and Iran would have made more sense.
On the face of it, the pipeline took a very strange route when there was a much shorter one available with less geologically unstable terrain (high seismic activity). But that route went through Russia or Iran. Although Russia's oil supply appears to have peaked, the US supply peaked ages ago (in about 1973), but the US is a glutton for oil. Obviously the US does not want to deal with Russia any more than it has to. Not surprisingly the construction of the Baku-Tbilisi-Ceyhan pipeline was the outcome of US influence in the region. The US paid Turkey something like one fifth of the construction costs ($823m) and has been extending its influence via NATO in the area for some time. The pipeline was designed to accommodate an oil throughput of one million barrels per day, which is around 1/87th of recent daily world demand. (EIA stats)

Colin Campbell, thought that the US invasion of Iraq might have indicated that US expectations may have diminished in the light of the many difficulties associated with extraction and transport in the Caspian region.[4] This disappointment factor might explain, in part, why the US cavalry did not come galloping to Georgia's rescue in the latest hostilities.

Sharing the Caspian coastline, Turkmenistan and Kazakhstan gained independence following the fall of the Soviets in 1991. Campbell writes in his superbly informed article on this complex subject, “The Caspian Chimera,” that Dagestan and Chechnya reluctantly remain part of federated Russia but “still seek independence, in a vicious campaign attended by many acts of terror. (...) [adding that] “Tehran, the capital of Iran, lies only 100km from the Caspian shore, so its role in the future of the region cannot be ignored." [4]

The position of Iran vis a vis the Caspian Sea (or lake) also explains some of the US interest in that country. Both Iran and Russia were obviously excluded from any participation in the construction of the pipeline.

China has been negotiating now since at least 2004 with Kazakhstan to build a 750 km extension of the Atasu-Alasankou oil pipeline to connect with the Kenkiyak and Kumkol oil fields, which are operated by China National Petroleum Company in Kazakh. CNPC stated that it expects to obtain about 5 per cent of its current requirements from the pipeline – 400,000 barrels a day. China's interest in the area could overshadow Europe's because the projected growth in demand from China is greater than Europe's.

Azerbaijan and Georgia receive gas from the Shah Deniz project in Azerbaijan. Interruption of supply forced Georgia to purchase gas at very high prices from Russia between January and July 2007. Georgia was desperate to lose its energy — and political — dependence on Russia and hopes that Shah Deniz may allow her to do this for a while. In the current petroleum gas and oil supply scenario, any country which has a reliable supply for a few years into the future becomes a potential magnet for development or for exploitation, and, in this region, US support.

Europe currently relies on Russia for a quarter of its gas supplies. More diverse supplies would be desirable.

Russia has developed a reciprocal relationship with Venezuelan oil in supplying oil to different customers.[5] Chavez in Venezuela has a strong relationship with Cuba and is a strong promoter of Latin American oil and solidarity with non-US states, especially in the third world. Not insignificantly, on 5 August, Putin announced that Russia ought to "restore [its] position in Cuba and other countries." This was after a visit to Cuba in July from Russian Deputy Prime Minister Igor Sechin. It is well-known that Latin America has good reason to fear interference by the US in its politics and its oil. [3]

Sorbet Khabuz feels that Russia percieves its old allies as disloyal when they cooperate on oil-ventures with the EU or the US. He says that Putin objected strongly to Kosovo's independence and "was unhappy that the Albanian Macedonian Bulgarian Oil pipeline (AMBO), extending from Bulgaria's coastal city of Burgaz through Macedonia and ending at Albania's Vlora port, would pass through Kosovo." [Referring to the Baku-Tbilisi-Ceyan pipeline], he notes that, "The pipeline project in question is being actively supported by the EU and the US with the goal of carrying Azerbaijani and Kazakh oil to the Black Sea via Georgia." [3]

Why did Georgia rattle its sabers?

On the face of it, it seems very unlikely that Georgia would have picked a fight with Russia if the Georgian president had not believed that he would receive backing from the US and Europe. Neither the US nor the EU have the means to enter into serious new wars, however. The US is already involved in Iraq and Afghanistan because of its own dwindling oil and gas supplies. Russia does have a reasonable supply of oil, coal and lots of gas and the capacity to defend itself. It can be very tough about managing its oil exports and it can form alliances with other oil exporters. It has also been suggested that Russia would not like Iran to develop nuclear capabilities and that this would provide a common point with the US.

One impact of Georgia's nose-thumbing Russia has been for the US and Europe to take a step backwards, away from it. This leaves Georgia, not only vulnerable to a Russian take-over, but it also frees Georgia to succumb to Russia.

Of course, Russia has evacuated, for the time being. If, however, we treat the recent (tragic for the civilians who have been victimised) events as a dress rehearsal, we now know that no-one is going to stop Russia from taking Georgia. A respectable ostensible reason may be to unite Georgian South Ossetia with Russian Northern Ossetia. From there it would be but a small step for Russia to assimilate Georgia. This would then solve Russia's problem of being kept out of the Baku-Tbilisi-Ceyan pipeline and the Baku Supsa pipeline and all the planned pipelines.

Russia has oil and gas, but it has probably passed its oil peak. If Russia were to acquire Georgia it would then control the BTC pipeline and become oil-rich as well as gas-rich. Although the US and the EU won't like buying the oil from their pipeline in Georgia from Russia, they have already shown that they don't intend to go to war over this prospect. The incentives for Russia to take Georgia and the pipeline are enormous; face-saving and energy securing in a region and a world where most powers are receding in their capacity to fuel daily business, let alone wars.

Historic precedents

There is an historic pattern of Russia taking over Georgia in exchange for protection from regional enemies, particularly Persia (old name for Iran) and Turkey. From 1810 to 1878, beginning with Western Georgia, most of Georgia was annexed to the Russian Empire, in an association which, after an initial unsettled period, was not too uncomfortable for the land-owning aristocracy of Georgia and probably made little difference to the severely ill-treated serfs. (Georgia freed its serfs even later than Russia did.)

After the Russian Revolution of 1917, Georgia declared independence from Russia. In 1921 the Red Army occupied Georgia and, Georgia remained a Soviet Republic (state) until 1990.

Historically the Caucasus oilfields were one of the main objectives of Hitler's invasion of the USSR in August 1941, but the German army and its allies failed to reach them. Georgia furnished the Red Army 700,000 soldiers (of which 350,000 died). There were, however German sympathisers who formed the Georgian Legion and fought with the Germans.

Political tension in Georgia prior to the Ossetia incident
There have been many historical tensions within post-soviet Georgia, principally from ethnic separatists in South Ossetia. The country has a history of corruption, even in Communist times by Russian standards.
In November 2003 the "Rose Revolution" in Georgia carried pro-Western Mikheil Saakashvili to power. Georgia accuses Russia of fanning separatism in Abkhaszia and south Ossetia in order to undermine Georgia's government. Russia has accused Georgia of spying and vice versa. Russia maintained or maintains two military bases in Georgia, scheduled to be withdrawn in 2007 and 2008. The United Nations has been involved in Peace Keeping in South Ossetia for some time and there are thousands of displaced people in Georgia. In November 2, 2007 Georgians demonstrated against the government, protesting that President Mikheil Saakashvili's government was corrupt. [6]

Also, if we know the United States, their versions of economic reform and democracy carry very heavy penalties for ordinary people. Wikipedia reports that

"The Georgian Government is committed to economic reform in cooperation with the IMF and World Bank." "Saakashvili is still (2006) under significant pressure to deliver on his promised reforms. Organisations such as Amnesty International have serious concerns over human rights [3], and discontent over unemployment, pensions and corruption (...).Georgia's relationships with Russia are at it lowest point in modern history due to Georgian-Russian espionage controversy and related events."

Sounds like the usual privatisation and asset-stripping drill that accompanies friendships with the USA to me. See review of Naomi Klein's Shock Doctrine

All in all, it might be very hard for Georgia to remain friends with the US if Russia and many of its own citizens did not want it to. Such sentiments are expressed here in a pro-Russian page. And the US doesn't seem all that keen either. One hopes not to see a re-run of situations like the one where the US encouraged the Kurds and Shi'ites to rise up against the Iraqi goverment, but left them to be slaughtered. And was Hussein set up by the US when he asked diplomat, April Glaspie, if Kuwait was important to the US, and she said, "No," and then he invaded, presumably believing that the US would turn a blind eye. After this the US went to the UN and the UN authorised force to get Hussein to withdraw his troops. Hussein agreed to withdraw, but the US seems to have used the opportunity then to attack his troops anyway.[7]

Alternative to war

Instead of war, there may be a different outcome, as oil-writer, Mark Jones suggested [6]:

"It should be borne in mind that the changeover from declining to ascending hegemony can happen - and has historically - not by means of war but with the consent and active participation of the declining power (...) Since the 1939–45 war, the US has in fact made a practice of co-opting present and potential rivals into junior partnership. It has done this not only to Britain, but also to Germany (1960s), Japan (1970s and 1980s) and latterly even to Russia (from 1991).(...)

Of the US situation, he observed,

"If the US has to compete on a level playing field with the rest of the world, then it may find that its urban infrastructure is just as uneconomic and unsustainable as was the Soviet Union’s loss-making effort to base itself on the industrialization of the Urals and Siberia. The US currently uses twice as much energy and raw materials per capita as the EU-15 average, and more than ten times that of China. It is desperately uncompetitive. When the dollar has to be backed up by real values, US per capita GNP may fall by half in just a few years, as in the Great Depression. Under these conditions it is hard to see how the US can hope to maintain its global reach and present hegemonic position. (...)

And, in the case of global war:

If, on the other hand, we are set on a course of global war, which was the outcome for “classic” economic depressions before 1914, and again through 1929–36, then Americans have only a very small window of opportunity (like Hitler enjoyed in 1939) before their military advantage evaporates." - Mark Jones, Battle of the Titans in Sheila Newman, (Ed.) The Final Energy Crisis, Pluto, UK 2008.

See also: Russia Never Wanted a War by Mihkail Gorbachev in New York Times of 19 Aug 08 for a view critical of Georgia's role in the conflict.

Sheila Newman is the editor of Sheila Newman, (Ed.)The Final Energy Crisis, Pluto Press, UK, 2008 which is due out around August 27 in Australia and round about the same time in the US. It should already be available in Britain. It is a collection of scientific, economic and political articles about oil depletion and other fuels and new technologies, including fission, fusion, geothermal, cellulosic biofuels and terra preta, by ten different authors.

ENDNOTES

[1] The Caspian Sea is considered an independent zoogeographical region due to the diversity, specificity and endemism of its fauna. Waters of the Caspian Sea house 400 endemic aquatic animal species, including the Caspian seal (Phoca caspica) and sturgeons (90% of the world catch). The sea coast provides important sites for many nesting and migratory birds such as flamingoes, geese, ducks, gulls, terns, swans. Many multinational companies are exploring the region for oil and gas. Source (with interesting descriptions of geophysical features and wildlife: http://www.worldwildlife.org/wildworld/profiles/terrestrial/pa/pa1308_full.html

[2] "Baku-Tbilisi-Ceyhan (BTC) Caspian Pipeline" at Hydrocarbons Technology com, http://www.hydrocarbons-technology.com/projects/bp/)

[3] Sohbet Karbuz, “War stirs energy corridor in Georgia,” in Today’s Zaman//www.todayszaman.com/tz-web/detaylar.do?load=detay&link=150151&bolum=109

[4] Colin Campbell, "The Caspian Chimera," in Sheila Newman, (Ed.)The Final Energy CrisisSecond Edition, Pluto, UK, 2008.

[5] Sheila Newman, “Venezuela, Chavez and Latin-American oil on the world stage,” in Sheila Newman (Ed.) The Final Energy Crisis, Second Edition, Pluto UK, 2008.

[6]http://en.wikipedia.org/wiki/History_of_Georgia_(country); http://en.wikipedia.org/wiki/2006_Georgian-Russian_espionage_controversy;

[7] "Please cast your minds back to 1990. We must remember the complete history of James Baker, the aristocratic Secretary of State to Bush 41. He instructed our ambassador to Iraq, April Glaspy, (remember her?) to tell Saddam Hussein that we had no interest in his fight with Kuwait. Saddam was itching for war with Kuwait whom he accused of slant drilling into Iraq's oil fields. Right after receiving Baker's message sent through Ambassador Glaspy, Saddam invaded Iraq. From that moment on Mr. Baker left April out there turning slowly in the wind. He denied all knowledge of her conversation. (Someone please tell me what lowly ambassador writes their own portfolio?)" Source: Re: Philip Klein's Talking with the Enemy, "Baker's World", The American Spectator, http://www.spectator.org/dsp_article.asp?art_id=10496

[8] Mark Jones, Battle of the Titans in Sheila Newman, (Ed.) The Final Energy Crisis, Second Edition, Pluto, UK 2008.

Note from Candobetter Editors:
Since this article is so popular, we feel we should tell readers that there is more, much more by Antony Boys, in Sheila Newman (Ed.) The Final Energy Crisis, Pluto, UK, 2008. Antony has two long articles in it: The first is about how North Korea coped without cheap soviet oil. The second evaluates in detail Japan's carrying capacity in the Edo period, then looks at changes to agriculture and population during Japan's industrialisation, then looks at how Japan may fare with oil depletion.

1. Rationale

A short while ago I wrote a "food and energy survey" of the city where I live in Japan to try to get some idea of how the city might do if there was an extended food and energy crisis. A pdf file of the survey is attached to this article. Please feel free to read and comment on it. Until October 2004, what is now Hitachi Omiya City had been Omiya Town, one other town and three other villages, and although I had lived in Omiya Town since 1986, when the town and village amalgamation occurred I had only a vague idea of what the new city consisted of.

Take the word "city" with a degree of skepticism, by the way. This is not London or New York. In Japan, any administrative unit with a population over 30,000 can be a "city". That can mean that you have a small commercial and administrative district with a large rural hinterland, as we have here. Don't go looking around for the "city". There really isn't one.

After writing the survey, I sent it off to several people for comments. One of these was my good friend Martin, who lives near Tokyo. Martin is writing a book about food in Japan, so he has a good feel for the subject, but the problem was that he had very little idea of what the city looked like. Martin came up to visit my family a few days ago, and so we set off on a five-hour drive around the city so that we could both get a much better idea of what is there. You can also see Martin's version of the trip on his blog.

Here's a sketch map of the city. It is very roughly a square, each side being about 12 miles, or 19 km. The brown shaded area near the southeast corner of the city is the main commercial and administrative area. An interesting feature of the city that you can see from the map is that there are two quite substantial rivers that approach each other and come quite close together at the southern end of the city area. The river flowing north to south on the east is the Kuji River and the river flowing roughly southeast in the south of the city is the Naka River.

One further notable geographical fact is that the city is on the northern edge of the Kanto Plain, the large flat area that surrounds Tokyo.

2. What's different about Japanese Agriculture?

Martin and I decided to drive along some of the main roads as far as the border with the next administrative unit, and to stop to take pictures every time we saw something interesting or representative of the city, or of Japanese farming in general. Perhaps three of the most representative features of Japanese farming are:

1) Field areas are small,
2) Farmers are mostly older people,
3) Capital intensity is high.

The first two are fairly clear, but the third feature refers to the fact that the amount and size of machinery is out of proportion to the land it is used to work. This is also one factor in the high energy-intensity of Japanese agriculture, which is expressed either in terms of high levels of chemical (fertilizers, pesticides, herbicides, and so on) inputs to the land, or in terms of very intensive labour inputs. In addition, for some fruit and vegetable crops, large amounts of plastic sheeting for covering the ground or for making hothouses are used, and in the colder seasons kerosene is sometimes used to heat the hothouses from the inside.

I will try to illustrate these three features with photographs taken during our half-day trip.

3. A Local Farmer

Actually, as we came out of the house, I saw that the farmer who is now growing a crop of upland rice (i.e. a rice variety that does not need to be grown in a wet paddy field) right next to my house had turned up on his morning round of his fields. We went over and said hello and I took out my camera and snapped him right there. The evening before, Martin and I had passed by another of his fields which is on my regular dog walk. The field is a bit less than one-tenth of a hectare and is now covered with a dense growth of soybeans. It's very 'clean', but it's interesting how it got that way. Since I walk our dogs along the same route nearly every day between about four and five in the afternoon, I had seen what had happened in the field over the few weeks since the soy had been planted. The farmer had been out there with a tiny hand-pushed machine (like a small manual lawn mower about 20 or 25 centimetres wide) almost every day, slowly and labouriously, and with meticulous care, removing anything green in the rows between the soybean plants. Sometimes he was just walking up and down between the rows, with his eyes on the ground, occasionally bending down to pluck out a weed. Only once in the two weeks or so that I walked by the field every day did we greet each other, because he was concentrating so hard on what he was doing that he probably didn't notice me, and I didn't want to disturb his concentration by calling out to him.

Martin and I agreed as we walked the dogs that this man's work is now being replaced by herbicide-resistant GE soybeans. If you are farming hundreds of hectares of soybeans, perhaps that makes sense to you. But it does not make sense in about 90% of Japanese farming, which is done something like I describe here, on very small plots of land. (There is NO commercial planting of GE soy in Japan.) When I visited Kumamoto Prefecture some years ago, the topography was so hilly/mountainous, that field sizes were even smaller than where I live. The people there told me that in the 1950s and early 60s they had switched to chemical/mechanical farming along with everyone else, but had given up a few years later because it just did not make economic sense on their small fields. That's why now Kumamoto Prefecture has more organic farming than any other area in Japan. I didn't hear anyone complain about it, though.

This farmer, growing his upland rice and soybeans on small fields here and there in the area (and is also well-known for his good vegetable seedlings) is about in his mid-seventies. I don't know anything about his children, but I have never seen any younger people in his fields. The 'funny' thing was that when Martin and I arrived back at my house about two in the afternoon, at the end of our drive around the city, there was a bicycle standing at the edge of the field with the upland rice growing in it; the farmer's wife had turned up to do a little weeding!

4. Small fields, disproportionally large amounts of machinery

First of all, we drove out along the main road that roughly follows the course of Naka River, which cuts across the southern end of the city. We reached the border with the next prefecture (Tochigi Prefecture), took a few pictures and turned back again. Here's a picture of what the river looks like at this point.

As we drove back towards the town again, we saw a brilliant example of feature number three (and one) taking place right up ahead; a farmer preparing a miniscule patch of land with a tractor. You can imagine his concern as, early on what should be an uneventful Monday morning, a car screeches to a halt and two foreigners jump out and start to take pictures! He smiled as we explained who we were and what we are doing (Martin's Japanese is pretty good too) and then went on to his next job for the morning.

This example is clearly extreme. I'm sure small plots of land as small as this are farmed all over the world, but do the farmers come round to prepare the ground with a tractor? These photos will make some of you, used to farming 100s of hectares at a time, laugh your heads off, but it is pretty typical of the way Japanese farming works, as you will see below.

5. Japanese agriculture: Elderly individuals with little family or local solidarity

A little further on, we saw a sign for "ostriches" and decided to take a look, expecting to see some kind of ostrich farm, but there were only the two giggly specimens that you can see in the chain-link pen here.

As we were having a laugh about the size of the 'ostrich farm', Martin caught sight of something interesting in a paddy field close by; a farmer with a basket on his back weeding the field.

We decided to go over and investigate. The farmer noticed us immediately as we stood at the edge of the field taking pictures and decided to come out and talk to us. He turned out to be extremely friendly and open, as most Japanese farmers are. He told us that his main work was growing vegetables for sale and that the rice he would harvest from the paddy field was just for family consumption. Looking around, we could see that there were plastic sheet hothouses nearby for preparing vegetable seedlings, and also vegetable fields.

I asked the man if the vegetables were his main source of income. I half expected him to say that he had other family members who bring in more income, but he did not, simply replying 'yes' to my question. I imagined that he lived nearby with his wife. I asked if he had been farming long and he said he had been farming in the same place for 55 years - he told us he was now 65.

He mentioned that he was doing his vegetable farming business as a group. I was interested in this because working as a group is one way of reducing the capital-intensity of the farming; the group could buy machines and chemicals as a collective, thereby holding down the average cost to each individual farmer. Martin and I had talked about this the previous day, and I was hoping we had perhaps run into a positive example of feature number three. I asked the farmer how many people were in the group. He said that they had started as seven, but were now down to two. That was disappointing, but he agreed with us that there were advantages to working as a group and I encouraged him to see if he could find more local farmers he could work with.

I was interested to know if the administrative areas had changed before and he told us that the area had been a small village before the previous round of town and village amalgamations in the 1950s. Then the area had become Gozenyama Village, which was then amalgamated into Hitachi Omiya City in October 2004.

I told him that I had recently completed a survey of the city to get some idea of how the city would fare if there were a sudden 'food and energy' crisis in Japan, given all the 'news' we were getting from the media about global food and energy problems, as well as the prices of gasoline at the pump and food in the supermarkets.

He seemed to be quite interested in this, but then, quite unprompted, began to talk about his son. I suddenly realized that we had stumbled upon a typical example of feature number two.

The farmer told us that his son, who lived with him in the house close by, was 38, but had only just recently begun to help out with the farmwork by sometimes cutting the grass (at the edges of fields and so on) with a kusaharaiki, the ubiquitous little two-stoke engine grass-cutter that every farming family here seems to have. The son apparently had no idea how to grow rice or vegetables.

This is absolutely typical of the situation here; children of farming families, with farmland that they will eventually have to take over, but with not a clue about how to grow their own food. I told the farmer that he had better hurry up and pass on his skills to his son, because if there is a problem in the future the son will not want to find himself hungry, and yet with fields that he doesn't know how to farm.

Martin told him that he could tell his son that two "European specialists" had just visited him and told him to do just that. I thought that was quite amusing. I don't know if the ostriches found it funny as well. Anyway, we exchanged names and I promised to visit him again sometime. In a month or so I will probably drive out and see how he's doing.

6. Prototypical Japanese agricultural scenery

Martin and I then continued on down the road back towards the city 'centre', but turned left onto a small road heading north towards the areas where the golf courses are. I had never driven up this road before, and it turned out to be a very pleasant typical Japanese country road in a low mountain area. We decided to stop and look when we saw a small area of paddy fields nestling in a tiny valley.

In hilly areas in Japan (all over Asia, actually) you will come across tiny valleys like this where the original stream bed has been built up and leveled so that the farmer can take advantage of the natural water flow of the stream to construct paddy fields. Large areas of paddy fields tend to be areas close to larger rivers and so work on the same basic principle. These small valley paddy fields are generally surrounded by densely wooded hills, as here, and so are fed with the runoff from the woods, usually full of minerals and other nutrients. This is sometimes called the "original Japanese scenery" - a kind of prototypical essence of the Japanese agricultural lifestyle. (You may get some idea of why the Doha Round and so on does not make a lot of sense out here.)

The rice flowers were just 'blooming' in the field so I tried to photograph some of them. If you haven't seen rice flowers before, this is what they look like.

Over the last 30 or 40 years, some of these tiny paddy fields have been abandoned as the owners become older and unable to farm all the land, or as the rice consumption per capita has declined and the government has ordered farmers to take some land out of use - 'set-aside'. Sure enough, the old paddy field at the head of the little valley had been abandoned. The paddy fields are nearly always abandoned from the head of the valley down - pretty obvious really, I suppose - but the main reason is that the top paddy field will always be the least productive because the water temperature is always lowest in that field.

Unfortunately, in this particular case, the little valley backed onto one of the local golf courses, which means that the runoff probably contained high concentrations of chemicals. That would certainly be one good reason for abandoning the top field, though I should think the rice in the other paddies would not be much better. Since there was no one around, we could not ask, but I have a feeling that the farmer is possibly eating the rice he grows in other paddies elsewhere and selling the produce from this little valley into the industrial food chain.

Sometimes one or two of the paddies have been turned into ordinary 'upland' fields, like the one you can see here, so tiny that you can even see the farmer's footprints.

Further up the road, we saw a field with an unusual dark red colour. We stopped to take a few photos. This was a small field of 'akajiso' plants. ("Aka" is red in Japanese. There are red and green varieties of this plant, the green one being called "aojiso". The word "ao" covers a wide range of colours all the way from what we call blue to green.) This is an edible leaf - quite tasty once you get used to it - which is used as a decorative leaf on certain kinds of food, especially sashimi, raw fish slices. If you buy a small plastic tray of sashimi in a supermarket here, the sashimi slices are placed on shredded Japanese radish (daikon) and then decorated with two or three of these leaves. The colour contrasts make the fish look really appetising. This small field of akajiso is maybe one-tenth of a hectare, perhaps a little less. When I got home, I showed the photo to my (Japanese) wife, who immediately exclaimed, "What a big field of akajiso!" (The ostriches probably would have had a good laugh at that.)

7. What Japanese call a "large" area

Martin and I drove up the main road to the border with Tochigi Prefecture close to the northwest corner of the city, enjoying the forests as we went. The trees are mostly Cryptomeria japonica, a kind of conifer in the cypress family. The tree is called "sugi" in Japanese and is sometimes called the 'Japanese cedar' in English, though it is unrelated to the cedars. Being a conifer, it is good for construction wood, but not much good for leaf mold. I am told it is also not a good fuel wood, perhaps because it burns too quickly and fiercely.

We then drove eastwards along a small and very pretty road through the low mountains until we came to the main north-south road, where we turned right to head home again. On the way there is a good lookout spot which overlooks an area of rice paddies close to the Kuji River. In the photo, you can see low wooded hills in the distance, which are on the far side of the river. In the middle distance, if you look carefully, you can see the river embankment. In this area, this is what we would call a 'large' area of rice paddies. Even so, you can see that the individual fields are one-tenth to one-fifth of a hectare each, each one of them owned by different families, with one family having one, two or three fields dotted about here and there. You can also see that some of the fields have been abandoned. It's either 'set-aside' or the owners have become too old to farm the land, or died, and the younger members of the family either cannot be bothered to farm it, or don't know how to, or have moved away to Tokyo (or other conurbation) in search of higher incomes.

8. Final comment

These three features of Japanese agriculture, small fields, age of farmers, and capital intensity, are generally not known to people in the US, Europe, Australia, New Zealand, Argentinia, or Brazil and so on, although Asian agriculture is quite similar and people in India and China would be able to relate fairly easily with this description.

Large-scale 'industrial' farming no doubt 'feeds the world'. Without the green revolution, humanity may well have run up against land-population limits in the 1980s or 90s, and Japan relies on industrial agriculture to feed 60% of its population, since only 40% of the food calories needed to keep the Japanese population alive are actually produced here. So what will happen if imports of cheap food and oil cease? That's why I wrote the survey; to try to see whether this small city can survive without 'imports' of food and energy from outside. If you read the survey you will see that there are many problems to be overcome even for a city like this to reach sustainable self-sufficiency (not the least of which is what to do about the hordes of hungry people from Tokyo who will want to relocate here - but that is another story). At least, after reading this and seeing the photos you have a better idea of what the city looks like, and perhaps what life might be like here after "peak oil" becomes really serious.

Please also feel free to comment below on either this 'photo essay' or the survey. If you care to ask questions, please also feel free do do so as a 'comment' and I will try to get around to answering your question(s) within a reasonably short period of time.

Oil Superspike and Forecasting Fatigue

If we take a flashback view on “official forecasts” from one year ago – in June 2007 – the unreality of those Cheap Oil Hopes jump from the page. While the OECD’s IEA is mutating quite fast into a Peak Oil friendly organization, able to admit that future oil supplies will not meet likely or probable demand, the US EIA and other diehards, ironically including the OPEC Secretariat and its far out underestimates of world oil demand growth, have not yet made that cultural revolution.

The chart below, from the US EIA’s June 2007 forecast, which for natural gas set a truly unreal forecast or wish-list 2008 average price, Henry Hub, of about 7.40 USD/mln BTU, is typical of how far out of line from reality some of the ‘official forecasting’ fraternity has got. For 2007-2008, the US EIA in June 2007 was hoping, very hard, the upward price spiral for oil was going to be trimmed back, to highly moderate, almost zero growth of average prices.

From Q3 2007 the graph of crude oil price change from previous year goes straight up – in the real world – not close to zero, as the US EIA hoped and wanted for 2008 and for 2009. For obvious reasons, the US EIA’s faith-based forecasters expected “nonOPEC supply” to ramp up, because OPEC was set to stay recalcitrant about unleashing its massive-mythic pent-up supply capacities. The US EIA placed its bet on new hopefuls like Angola and Azerbaijan + Kazakhstan, and tarsand grubbing Canada, and perhaps even hoped Russia, too, would ramp-up exports in a quest to grab petrodollars. Or maybe they would do this to please the outgoing G W Bush administration? Or because NOPEC producers have a special urge to exhaust their resource pile at record speed, drive down the oil price and national revenues, ending up as Price Takers peddling their cheap and tacky Sunset Commodity like they did for 15 years through 1985-2000. Dream on !

We all know that ‘supply side economics’ is the only economic policy music since at least 20 years, but supply siders also have one demand-side idea on oil. This is ‘price elastic’ demand shrinkage due to oil demanding consumers, habituated to cheap oil, waking up to unreal and exotic prices and suddenly using less. Certainly since 2005, as oil prices have racked their way up, the consumer-nation energy agencies led by the OECD’s IEA and the US EIA have manfully done what they could to talk down demand – on paper.

It might have been high last year but Boy ! Have we got news for you next year ! The slump in demand forecast for last year didn’t happen, as the world’s regular Teflon Herd consumer kept on gulping their gasoline, gasoil, cooking kerosene, aviation kerosene and other fuels, but this year everything is different. Rivaling each other in unreal forward demand estimates, and joined also by OPEC’s Secretariat for whatever dark or hidden motive, by the investment banks and by almost all analysts, the forecasting crowd today claims world oil demand in 2008 is “unlikely” to grow more than 1.1 mln b/d to 1.3 mln b/d.

Maybe these ‘experts’ don’t know the world automotive industry is in full-flood, with a likely 2008 output around 70 million cars, 27 million motorcycles and scooters, 8 million heavy vehicles including trucks, buses, tractors, harvesters and construction site vehicles, and 2 million other road and off-road vehicles. To be sure, 4WD monsters with 350 HP engines trundling round shopping mall car parks are no longer in vogue, in the US or Europe, but cars arent going out of fashion. The first thing buyers do with a new car is fill the tank, and the same for buyers of ‘Capemax’ cargo ships using up to 10 tons of oil per hour, or buyers of Airbus, Boeing and business jet planes and the bulldozers needed to build new airports for them to land on their oil-based tires.

Real world demand growth in 2008 is likely closer to 1.6 or maybe 1.7 mln b/d than 1.2 mln b/d, immediately swallowing June’s largesse from King Abdullah, to grace the world’s consumers with another 0.3 mln b/d (or was that 0.2 mln b/d ?). The headline number for world oil demand as a year average daily number, is likewise and constantly underestimated. One big reason for this is ignoring the rate of loss-to-production and losses through all downstream steps in the well-to-wheel chain. These add by my estimates to a year average near 1.4 mln b/d and are increasing at least 2 times faster than production growth (around 4% annual increase of losses for 2% production growth). By late this Summer, the peak annual bulge of demand can lift global demand beyond 90 mln b/d. Will production meet this ?

WORLD OIL DEMAND 2005 - 2008

NOTES:
1.Daily demand in Million barrels/day (Mbd) on “all liquids” base, including NGLs, refinery gains, other condensates, tarsand and syncrude oil, GTL (gas to oil), CTL (coal to oil) and the biofuels
2. Total demand includes all loss-in-production, loss in transport, storage and loss in break of bulk operations, estimated at 1.4 Mbd.
Net final demand for 2008, for example, is a day average of 89.5 – 1.4 = 88.1 Mbd.
3. First annual peak, 2007, was depressed due to exceptionally warm winter conditions in northern hemisphere.

200-dollar oil by Christmas ?

Since late April 2008, gathering numbers of analysts have come around to the simple logic I noted many times previously. From Jan 2007 to Jan 2008 oil prices swung from a month-low of 49.50 USD/bbl in 2007 to a month high above 100 USD/bbl in 2008. Doing that doubling operation one more time generates a Jan 2009 target of 200 USD/bbl. After Jeff Rubin of CITIC, we had GS analysts led by Arjun Murti, in a 5 May report titled “Has the Oil Super-Spike Endgame Begun ?” which concluded 200-dollar oil is not impossible. The few European analysts following Patrick Artuis of Natixis Bank, who more than 2 years ago forecast that 200-dollar or 300-dollar oil was far from science fiction by around mid-2009, come to the same ballpark estimates as Murti’s report.

Maybe we need to spike-up to 200 USD/bbl to achieve finance sector and global economic meltdown, but maybe also we don’t. Prices above 130 USD/bbl are going to do impressive things for US monthly oil trade deficits, on its 13 or 13.5 mln barrels/day of crude and products imports. India imports the same percent of its total consumption, about 65%, even if this only adds to a modest 2.2 mln b/d, but paying for cooking kerosene in a country where 300 million persons – exactly the same number as USA’s total population – live on about 1 dollar 50 cents-per-day means very big subsidies. If not, the rubber band breaks and India’s vanishing forests disappear even faster as firewood, and social tensions will burn in a country with a Muslim minority big enough to make it the third-biggest Muslim nation in the world, if it was a separate entity. Oil subsidies in India, loudly decried as market distortion by OECD finance ministers worried about gasoline prices for their consumer horde car fleets, and worrying fall-out in the airline industry, have spiraled to about 3% of India’s GNP. China’s impressive foreign exchange cashpile, like the US trade deficit but in exact reverse – China is a creditor nation – will surely start shrinking as 130 dollar-oil eats into it, but nowhere near so fast as shrinkage of Japan’s ‘traditional’ monthly trade surplus, already down 33% on one year previous. As economic growth slows, quite fast in India and also in China, quite fast in several European countries, very fast in some Latin American countries, inflation rises – usually described as ‘only due to oil’, but now surely helped by oil.

The club of big economies and countries with 20%+ annual inflation has now reached more than 20, and is growing. Inflation is not uniquely due to oil prices but helped by energy cost push, specially at over 100 USD/bbl, and when added to falling economic growth is the signal we have the rubber band of “seamless global growth” stretched near its limits. The detonator for a global economic explosion, triggering a crash landing for growth and inflation at 10% pa right across the OECD, and many times that outside the OECD, is easy to project. When sudden and repeated interest rate rises are brought to close proximity with existing high inflation the global economy can replicate 1979-1980. This was the last time oil prices in 2008 dollars were anything like today’s, probably around 95 to 110 USD/bbl when corrected for inflation. The real difference was that interest rates, at the time, were sky high, at over 10%pa in all OECD countries when the second Oil Shock hit.

Stress and Storm Signals

To be sure the situation is grave. June’s G-8 finance ministers meeting in Osaka, at which the Russian and Canadian ministers were perhaps not sincerely sure they wanted cheap oil, due to oil’s miracle effect on their budget balances, foreign exchange reserves and value of their national moneys, was held under special crisis conditions. The ministers posed for the family photo without neckties – a new Japanese custom for office-based salarymen who, without ties, can take temperatures at least 10°C higher than nekutai colleagues hooked on air conditioning. As everybody, or at least finance ministers believe, airconditioning is a big oil user in advanced economies burning 140 million-year-old fossil residues to change the world’s climate. We can ask: at 200-dollars for the barrel will the ministers pose naked ?

World finance and business leaders have to date in mid-June not come around to telling us what oil price is needed to make the band snap, which in fact is the real and interesting question. There are several parameters in the mix deciding when and how this happens, all of them daily-commented by finance and business players, analysts, and by consumers in the street, whether driving their car or buying food or anything else.

One way global economic explosion can happen is when or if the USD versus EUR, or Dollar/Euro struggle gets vicious. Today even Ben Bernanke wants a strong dollar, to curb both imported and domestic inflation, and is fast losing interest in bailing out subprime-addicted investment and other banks, asset reinsurers, and other Wall Street wailers for billion dollar Federal Reserve handouts. The Euro Central Bank’s Monsieur Trichet created the Euro in a pure atavistic dream of “saving Europe from inflation”, forever of course. This hasn’t worked. The outrageously overvalued Euro does not protect against inflation – it might even favor or generate it by its own heavy presence. No country feels the money is its own, and everybody feels they were cheated by the fiat exchange rate they had to accept, to get Euros.

As in Argentina, Venezuela, Russia or the GCC countries, real world inflation has really slipped out of Al-Din’s petro lamp in Europe, trashing ECB and official, as well as “consensus” CPI figures produced by consensus forecasters anxious to please the ECB. Europeans no longer believe inflation is low because, after all, flat screen TVs always cost less and “the Euro is strong”.

The USD/EUR pivot is exactly 1.50 USD for 1 Euro; when the Euro gets there it can fall and fast, with no floor, like it rose against the US dollar with no ceiling – which is par for a fiat money The Trichet gang will not take this lying down and will crank up interest rates. So will Bernanke. Pretty soon the US goes into real economy recession, like the Eurozone was already “but nobody knew” because 1.5%pa economic growth is normal for Europe’s obsolete, oil-intense and energy-intense “postindustrial” countries living like the USA with unreal dreams of economic power.

In the Europe of June 2008, retail gasoline and diesel prices around 9 to 10 US dollars per US gallon are already generating daily protests by the biggest energy-using and wasting industries and professions, from fishing and trucking through farming to taxis and ambulances. With a Euro buying only 1.18 USD, the famous “target rate” the ECB itself set, back in 1998 at the Euro’s launch, this shifts up to 11 dollars-a-gallon or more. How long do consumers take that ?

The Oil Price Trigger

The important point is this: current global oil supply/demand conditions can bring 2009 Super-Spike prices to the present anytime we get a geopolitical shock to layer on the shifting mix of factors making the rubber band very fragile. Even without this, completely spooking average analysts and business-as-usual deciders, pure physical shortage might tilt oil prices into Super-spike realms by mid-2009. Constantly underestimating demand, and overestimating new supply is a sure way to experience bad surprises.

We can say that if 130-dollar oil is a really bad dream for the real world economy, 200-dollar oil will be even more traumatic. With the USA’s oil trade deficit running at maybe 2 billion dollars-a-day, the Obama gang will need a lot more than friendly winks and gifts from Wall Street backers – and will have to radically cut US oil import demand. Exactly the same applies to European leaders painfully trying to fool European consumers they need a European passport and army, not affordable food, lodging and energy. In other words, the pussyfooting with bolt-on gadget “soft energy solutions” as our heartfelt contribution to fighting climate change will need to give way to simple and straight oil-saving and energy-saving. This will be the equivalent of what Jimmy Carter called a cultural revolution – and like his administration showed, these don’t happen without crisis.

Copyright Andrew McKillop, 2008
Andrew Mckillop

Also published at http://www.energypulse.net/centers/article/article_display.cfm?a_id=1798

1. What did the Global Food Security Statement say?

I want to start by taking a look at a little part of the recent G8 Hokkaido Toyako Summit G8 Leaders Statement on Global Food Security#ee0000">1:

#000080">7. We fully recognize the need for a wide range of mid- to long-term measures to tackle the issue of food security and poverty, inter alia, the importance of stimulating world food production and increasing investment in agriculture. To this end, we will:

7. (g) accelerate research and development and increase access to new agricultural technologies to boost agricultural production; we will promote science-based risk analysis including on the contribution of seed varieties developed through biotechnology;

9. (i) ensure the compatibility of policies for the sustainable production and use of biofuels with food security and accelerate development and commercialization of sustainable second-generation biofuels from non-food plant materials and inedible biomass; in this regard, we will work together with other relevant stakeholders to develop science-based benchmarks and indicators for biofuel production and use;

Firstly the underlined part of the short paragraph 7. (g) (don't ask me about the numbering system, I don't understand it either) has a number of problems. I do not want to go into it very deeply, except to say that I think it is supposed to convey the message, "We are going to do a risk analysis on the use of GE (GM) crops," without the slightest intention of actually doing so. In fact, the clause is so garbled it is hard to see what is meant at all, and perhaps the only thing we can really get from it is that there is an intention to push GE crops. Please feel free to comment if you think you can come up with a more comprehensible interpretation of this paragraph.

Paragraph 9. (i) is much more complex. Firstly, there is a bow in the direction of the food security problems that have been occurring; rising prices of grains, possibly because the use of maize and soybeans for the production of biofuel (essentially bioethanol or biodiesel) in the USA has driven up the prices of those grains. Just exactly why the prices of grains are rising is not clear, and the situation is complex; rising crude oil prices (which are driving the biofuel boom), low world stocks of grain, reduced production due to adverse weather conditions in some countries, people in developing countries eating more animal protein, grain speculation, and so on.

Then it appears that development and commercialization of sustainable second-generation biofuels from non-food plant materials and inedible biomass is to be accelerated. "Development and commercialization" means that large corporations are going to be involved, and in the context of paragraph 7. (g) this must mean GE crops for biofuels. In fact, it has already started, and in addition it might not be unfair to say that most GE food crops that have come onto the market thus far function just as well as biofuel crops as they do for human food crops. "Sustainable" is really not appropriate here, and I will explain why later. "Second-generation biofuels from non-food plant materials and inedible biomass" refers to the ability to process cellulosic plant materials into ethanol, not a whole new and different biofuel. The idea is to use the non-food part of the plant - leaves, stem, and so on - for the biofuel, while using the food part, the grain, for food. This may, and probably will, involve genetic engineering of the plant to make it in some way more favourable for ethanol production, e.g. by trying to raise the total amount of biomass produced per plant, raising the proportion of cellulose in the plant, and so on. That is the "inedible biomass" part. Just exactly what is meant by "non-food plant materials" is uncertain. It could refer to non-food, specialist biofuel crops, or it could refer to any kind of plant cellulosic material, such as wood. In fact a bioethanol plant started up in Osaka in January 2007 making ethanol from construction waste materials using a GE bacillus coli to break down the cellulose2.

Finally, we have "we will work together with other relevant stakeholders to develop science-based benchmarks and indicators for biofuel production and use." "Other relevant stakeholders" are presumably corporations. "Develop science-based benchmarks and indicators for biofuel production and use" means a legal regulatory framework for the production (i.e. with GE crops) and use of biofuels. "Other relevant stakeholders" does not mean you and me. We do not need to "develop science-based benchmarks and indicators for biofuel production and use," as I shall explain below.

2. What are they trying to do and what are the problems?

What can we learn from this reading between the lines? I think the main messages are this:

a) Bioethanol, and to an extent biodiesel, is here to stay and will be an important energy source in the future energy mix,

b) GE crops for food and bioethanol are strongly linked,

c) Crops for biofuel, in the US at least, will continue to be staple grains, maize and soybeans, grown on good cropland,

d) Big corporations are going to do it; you are not a "relevant stakeholder".

There are several problems with this:

i) This method of producing bioethanol/biodiesel probably uses more energy than the resulting ethanol contains.

ii) This will take place on the best cropland regardless of the effects on the poorer sections of the world's population OR the viability of the soil, our most crucial resource base.

iii) The monopolisation of food through the monopolisation of seeds will be expanded to and linked to the production of fuel.

Let's take them in order. i) There is a debate raging over this, but I'll spare you the details3. It is sometimes quite reasonably said that when we are eating the produce of modern, energy-intensive, chemical-mechanical, industrial food, then we are "eating oil." That's fairly accurate, since at least 10 energy units of fossil energy resources are needed to put one energy unit of food on your plate. The nitrogen fertilizers that are used to grow the crop probably derive from natural gas, but the statement about "eating oil" is, by and large, correct. Probably 2.5 to 3 of the more than ten units of energy are used on the farm in the direct production of the crops. The interesting thing is that what we do next is take those harvested food crops and process them into ethanol, using more energy along the way. Even with just this very simple explanation, it already looks like the energy in the alcohol produced this way is going to be less than the energy used to produce it. However, energy assessments of this nature are notoriously hard to do, and depend on the assumptions made about the farming method and the crop processing method, what to count and how to caount it, and so on. Pimentel's papers generally claim a net energy profit ratio (EPR) of roughly 0.7 to 0.77, while others claim an EPR of roughly 1.2 to 1.4 4.

Even the EPR of 1.4 is not really all that wonderful. The EPR of crude oil is at least 10, depending on the kind of extraction, the quality of the oil and so on. Why go to all that much trouble when you can just use the oil or natural gas as the energy source? Come to think of it, if oil and natural gas (oil/NG) are necessary to produce the ethanol, then what's the point, since one of the main reasons for using bioethanol in the first place was to create an alternative to fossil energy resources and to start to reduce dependency on fossil energy as early as possible? The conventional methods of producing bioethanol do neither. All that is being done is the conversion of oil/NG into ethanol on a roughly 1:1 energetic basis. In terms of energetics, this is plainly nonsense, even if it does make a profit when government subsidies are available, for instance. So why do we do it, apart from trying to make a fast buck, and are there not better ways of doing it? I will deal with these questions below.

Let's move on to ii) This will take place on the best cropland regardless of the effects on the poorer sections of the world's population OR the viability of the soil, our most crucial resource base. When the use of "inedible biomass"5, cellulosic materials such as leaves and stems (called "stover" in the case of maize) comes into use, there will be more plant material available from each hectare of crop, and the EPR may rise, but since there is no by-product from the ethanol-producing process that could be used as a fertilizer, no plant material would be available for returning to the soil, and the use of chemical fertilizers will be necessary unless the crop is grown 'organically'. (By the way, you probably noticed from the mention of a plant making ethanol from construction waste materials above that the processing of cellulosic materials is already possible. In this case a by-product of lignin pellets, a biomass fuel which is used to fire the boilers in the plant and also sold as a fuel, is being made.)

Modern maize growing methods are not good for the soil anyway, but becoming unable to return the stover to the soil, and thereby becoming reliant on chemical fertilizers for fertility is a quick way to ruin the soil. Once crude oil/NG become really scarce and expensive, perhaps in a few years' time, then there will be little option but to farm organically. There are alleviating measures, such as not taking ALL the stover for alcohol conversion, or rotations with soybeans and other crops, but this alone will not resolve the problem of dependence on oil/NG to grow the crops6. Organically grown crops, by definition not using petrochemically-derived fertilizers, herbicides and pesticides, will do the job, but for example, in the case of the USA, I find it hard to imagine organic farming on the scale of Mid-Western maize fields. Unless, perhaps, even after crude oil/NG are unavailable, traction can still be provided - using bioethanol to fuel tractors, harvesters, trucks, and so on. This will make farming without oil/NG possible, without having to rely on farm animals for traction7. But there are some agricultural processes that require electricity; irrigation, post-harvest drying and processing of crops and processing of feedstock crop material to produce ethanol. Where will that come from? You may have noticed that in mid-July Al Gore made a proposal for 100% of USA electricity to be produced from renewable energy sources (PV, wind, hydro, geothermal and so on, and he did NOT specifically mention nuclear energy, so please check it out for yourself at the URL given in the note if you are suspicious about this) within ten years8. Now we begin to see what the USA and other countries may be planning over the mid-term, approximately the next five to thirty years.

As this scenario unfolds, as I think it will in the years to come, and countries like the USA become unable to export basic grains for food because of biofuel/biodiesel production, what considerations will the countries who implement this weaning of themselves from oil/NG have for food-importing countries which are now experiencing problems with the rising prices of basic grains? None, probably. Exports of any basic and/or essential commodity are carried out on the basis of a surplus over domestic needs. If there is no surplus, there is generally no export. It does not matter what the commodity is; food, crude oil, cotton, timber, you will not ask your fellow citizens to suffer in order to feed, fuel, clothe, or house people in another country or another continent. I do not think asking the WTO to ensure that grain exporting countries continue to supply grain to importers is going to be of much use. If there is an energy crisis, will you be able to ship it to them anyway? The global economy is cooling off and winding down. Who knows how far it will go? Countries like Japan, and many Middle East and African countries, will simply be "off the map", left to fend for themselves.

3. Where is all this heading?

Now let's see how this ties in with iii) The monopolisation of food through the monopolisation of seeds will be expanded to and linked to the production of fuel. Actually, here I need to quote one more sentence from the G8 Hokkaido Toyako Summit G8 Leaders Statement on Global Food Security:

This is an interesting statement. It reveals just about how far humanity has come down the road to stupidity. If we look at this from the point of view of Japan, the statement may be true. Japan was about 80% self-sufficient in food in 1960. That means that if there had been a sudden cessation of food imports Japan could have probably survived without starvation, just as Cuba did in the mid-1990s. Since the 1950s, the USA had been cajoling Japan into importing large amounts of its agricultural surplus, maize, soybeans and wheat, thereby bringing about a substantial diet change in Japan towards an increased intake of bread, pasta, processed foods and animal protein, and away from rice and other traditional foods. The mood in the 1960s, the "era of high economic growth" in Japan, was that it would be possible to import nearly all raw materials, including large amounts of food, and get rich by manufacturing and exporting industrial goods. Export earnings would easily cover the import of basic essentials, such as food. With a few minor hiccups (oil crises and adverse growing weather either in Japan, USA or elsewhere) the system has worked well for about 40+ years, but very few people at the Japanese end have ever given much thought as to how long the system could continue before collapsing under multiple crises caused by the depletion of fossil energy resources, rising world population and so on. It seems that we are now fast approaching the crunch point.

It is, of course, possible for people to grow food for local consumption without the need for 'a robust world market and trade system for food and agriculture,' but not if you live in a large city much over about 250,000 people (people in cities smaller than this in Japan are generally within walking distance of agricultural land) or if you live in a food-importing country which does not have enough agricultural land to support its population. Japan's population in 1960, for instance was just under 93.5 million and food self-sufficiency was around 80%. Japan's population peaked in 2004 at 127,777,777 people (Really? It's my little 'joke', but quite accurate and easy to remember)9 and the food self-sufficiency is now 39%. Many Middle East and African countries may be in a similar situation (though their populations may be rising rapidly, and not declining). Undoubtedly, these countries are now dependent on the world trading system for food (or like the Democratic People's Republic of Korea [DPRK - North Korea] face starvation), but will somehow have to find the means to pay for the imports, including transport, despite the high prices and decreasing availability of oil/NG and probably coal as well. These countries will clearly also not have the luxury of using their cropland for the production of biofuels. Effectively, they have 'allowed' their populations to rise beyond what their cropland endowment could support. In Japan, there has been no public debate on this issue. In my experience, the general public has very little knowledge about cropland areas and population, although recently many people seem to know the 39% figure for food self-sufficiency.

This looks like a real recipe for disaster; a substantial 'dieback' of population due to starvation, as has occurred to a certain extent in the DPRK. What solutions could there be? a. Humane, natural, but controlled population reduction by reducing the birth rate through the expanded use of contraception and so on (instead of a population crash by starvation). I think this will either take too long, or will be impossible to implement due to cultural or legal enforcement problems. Under current population scenarios, Japan's population is due to fall to between 90 million to 100 million by 2050. Is it possible that this could be speeded up so that Japan could be effectively 100% self-sufficient in food by, say, 2030? I doubt it. One only need recall the experiences in India and China ("Having one child is good") to see how effective these policies are in actually reducing the population. On the other hand, negative population growth, abhorred by governments including Japan's, does exist, but mostly in advanced industrial countries which have high degrees of food self-sufficiency (France, Germany, UK, Australia and so on).

b. Expand the cropland horizon. Almost unthinkable. In Japan, there is a case for a certain amount of rehabilitation of former cropland, from golf courses and so on, but not a lot. The roughly 4.7 million hectares (m ha) of cropland in Japan now, could perhaps be increased to 5 m ha. The cropping ratio (number of crops grown on a certain plot of land per year) is currently around 95% (meaning that not all available cropland is being used) but in the 1950s the average over the whole of Japan was around 135%, and where I live was 160% in 1960. So at 5 m ha x 135% = 6.75 m ha. If 10 people are fed on one ha, then theoretically 67.5 million people could be fed. If you calculate the number of people that could be fed at 80% self-sufficiency and a population of 93.5 million (the situation in Japan in 1960), you get about 75 million people. Call it 70 million. That's 55% of the current population. What are the other 45% supposed to do? No one knows. Even in 2050 this will still be at least 20 million people 'too many', if the statistics still hold in 50 years time. I suspect that, given desertification, decreasing availability of water, population rise, and so on, many Middle East and African countries are in roughly the same situation. The 'AIDS epidemic' is thought to be resulting in declining population in some African countries, but who really knows?

c. Increasing land productivity of crops. The 'Green Revolution' in staple grain agriculture since the Second World War has resulted in a roughly 50-year interval during which the increase in unit area yields of the main staple grains, wheat, rice, maize and soybeans rose faster than the world population. This was at the expense of 'modernising' agriculture - really 'industrialising' agriculture through the use of fossil energy resources to mechanize, chemicalize and electrify agricultural (food) production. But by the early 2000s the 'Green Revolution' was losing effectiveness, and by 2008, although yields are still rising by possibly 1.5% per year (3% per year in the 1960s), the world appears to be slipping back down in terms of grain production per person. This is, however, not the place to go into the 'meanings' and ramifications of the 'Green Revolution', which has been adequately dealt with elsewhere10.

A few days ago, my mother-in-law showed me the front page of the well-known Asahi Newspaper for Sunday July 20, 2008. The top article, about a quarter of the front page, and then spilling over to even more on page two, was about GE crops and food. The headline was "Tilt towards GE" and was part of a series called "Environment Year Zero". (Everything is in Japanese. These are my translations, including below.) So apparently 2008 is the year we start thinking about the environment in Japan. That was 'news'. The article is reasonably balanced, but a little bit 'tilted' towards the possible future promise held out by the developers of GE crop plants. In one part, the article states. "By 2030, seeds of three of the main agricultural items, maize, soybeans and cotton, will be developed such that yields of these crops will double in comparison to those of 2000, and the amounts of land, water and fuel needed to cultivate the crops will be decreased by one third." Monsanto CEO Hugh Grant is quoted as saying, "We must fill the increasing demand for grain while protecting the environment. We will play this role." The GE seed developing corporations are notorious for their statements on "feeding the world," but most of the readers of the Asahi Newspaper do not know this.

What's the betting on the "By 2030..." statement above being realized? And at what 'price'?

It would be 'nice' to think it could be possible, but the seed companies face opposition to their patented seeds on three grounds. The first is that foods produced from GE crops may be hazardous to human health. Despite industry claims to the contrary, humanity does not understand genetics sufficiently well to guarantee the safety of GE plants and foods. At the very least, the protein content of the GE produce will be different to conventional (non-GE) produce, and the presence of novel protiens increases the risk of allergenicity for some people. Other unpredictable changes in the genome of GE plants may occur as a result of the genetic engineering process, and the spread of antibiotic resistance due to the vectors used in the GE process will continue as long as the antibiotic markers are used. Effectively, the fact that immense amounts of GE foods now being consumed by unwitting consumers (because their countries will not enforce a strict labelling system) is tantamount to a monstrous live experiment on the human race. Do we want to continue with this?

Secondly, the massive introduction of GE crops, already happening in the USA, Canada, Argentina and Brazil, will cause biodiversity to decrease. It will drive out traditional and conventional varieties, leaving mankind very vulnerably dependent on a much smaller number of GE varieties, which will almost inevitably have more unstable genomes than their traditional and conventional ancestors. This kind of biological and ecological instability is something we would be insane to walk into with our eyes open.

Thirdly, there is the problem of the monopolisation of seeds, and therefore the monopolisation of the world's food supply in the hands of a very few multinational companies. Imagine that you could control food on a global scale. I do not think I have to spell it out for you.

4. What's all this fuss about "second-generation biofuels"?

I think the part in the G8 Leaders Statement on Global Food Security that says, "accelerate development and commercialization of sustainable second-generation biofuels from non-food plant materials and inedible biomass," despite the fact that the technology is already developed and established enough for full-scale commercial plants to be starting up recently, means that "we are not going to start the really serious part of the changeover from the fossil energy resource economy to the biofuel economy until the biofuel GE crops that are now being developed are ready to go in the fields."

The explanation of why that is and what it means is the subject of the remaining part of this article.

I do not think there's much doubt that the greatest problem with GE crops is the third one, the monopolisation of the food supply through patented seeds. The purveyors of the seeds ought to be betting that the first and second issues are really not all that serious, since it may well be themselves and their descendants who have to live with the problems along with all the rest of us. However, the promise of global control, which now seems to be within their reach as country after country, region after region succumbs to GE crops and food, completely overrides the first two issues.

If you want to get an idea of how the corporations get a toehold on a country, the first is through the media, as in the example of the Asahi Newspaper given above. It's not hard to find farmers and journalists who will push the GE agenda. The second is through the contracts and patent system. The GE seed company owns the seeds. The farmer cannot replant the seed from this year's harvest the following year; a new batch of seed must be bought. The farmer signs a contract with the company, giving the company many rights over the farmer's agricultural practices and bookkeeping. If GE seed from a neighbouring farmer's field finds its way onto your field, and if the company investigators find the GE plant growing there, you will be in violation of the patent and liable to litigation11. Contrary to what the companies and GE proponents claim, there is no co-existence with conventional, organic, or any other kind of agriculture. Once its in your area, it's just a matter of time. Neither do these people give a hoot about global food security. If their "feed the world" statements turn out not to be true in twenty years' time, who is going to hold them responsible for it? How about you?

Farmers will have no say, no control, over what they do or how they do it. Any farmer that does not toe the line will not be renewing the seed contract the following year. The same will also be true for biofuel crops. They will all be GE crops, the companies will control the farming, the processing and the distribution of the biofuel. What is more, and possibly crucial, opposition to GE food will be impossible because we will be told that without GE crops there will be no biofuel for transport, farm machinery, construction equipment, domestic heating (including water heating), and so on. Food and biofuel crops may be identical and growing in the same field, one part for human food and other parts for biofuel. If you want fuel, you must eat the food. You do not want to go back to living in the Middle Ages, do you?

How do I know this? Ethanol is not a new "product". Humans have been fermenting stuff to get drunk on for millennia. We just did not have cars to run it on. Almost every Japanese person with a brain has heard of the Ford "Model T". What they do not know is that it was designed to run on both gasoline and ethanol. Apparently, Henry Ford was more in favour of ethanol than gasoline, but ethanol was pushed out of the market by the Prohibition, partly funded and supported by John D. Rockefeller. Another fact people do not know is that the Model T had a 'spark advance lever' just behind the steering wheel, roughly where the windscreen wiper lever is on many cars now. When running the car on ethanol, or simply when accelerating, the ignition timing could be advanced, as ethanol needs advanced ignition timing compared with when running the car on gasoline. The later Ford "Model A" had a 'knob' just below and to the right of the dashboard that you could pull or push to retract or insert the needle in the carburettor's jet. Running a car on ethanol requires a slightly larger aperture jet. There are photographs of these features of the Models T and A in David Blume's book "Alcohol Can Be a Gas!" (p.12 and 430)

The Ford Models T and A were the first FFVs - Flexible-Fuel Vehicles, cars that can run on any mixture of ethanol and gasoline from 100%:0% to 0%:100%. Interestingly, Blume says that there are about 6 million FFVs on the road in the USA now, but most of the people who are driving them do not know they own one, and most of the dealers do not know they are selling them! (p.429) Blume's book is a revelation; over 500 pages of detailed information on all aspects of ethanol and other fuels. Blume is what we would call in Japan a true "ethanol otaku" - an ethanol maniac, but more, someone who has invested a huge part of her/his life in finding out about and gaining expertise in one particular subject. A living ethanol encyclopaedia. Even if your car is not an FFV, it can be converted for ethanol use fairly easily by a car mechanic who knows what s/he is doing. But then the car will not run on gasoline unless you convert it back again. The main point about conversion to ethanol for recent cars is the alteration of the fuel injection system. Blume's book gives details.

But Blume's book is not just about converting your car to run on ethanol. It contains information on sources of ethanol (crop plants, waste products, and so on, including cellulosic materials), how to ferment them and how to distil the ethanol. You, or a small group of you and your friends can start to do all of this for a few $1000s (a few 100,000s yen) provided someone in your group knows how to look at David Blume's book and set up the fermentation and distillation equipment. Then it would be handy if one of your friends is a fairly competent car mechanic, and another one a lawyer. But the G8 and their corporate friends do not want you to know about this or to read this subversive material! If you've bought or read "Alcohol Can Be a Gas!", please comment. I bet I get very few such comments! I heard about it on a certain Internet podcast, not through the regular mass media.

So what's going on? The main reason, it appears, that the cultivation of biofuel crops suddenly increased in the USA a few years ago was because of the rise in gasoline, i.e. crude oil, prices. Just exactly why crude oil prices are rising is hotly contested. I believe it is happening because the peak of annual world extraction of crude oil has been reached; the so-called "peak oil". However US$140 a barrel looks too high to have been caused by "peak oil," (Andrew McKillop says crude oil's real equivalent price of the early 1980s, corrected for competing asset prices and the US dollar's world value is probably around 175 USD/bbl) so there are other factors involved. Speculation, manipulation by oil companies for higher profits, manipulation by other powerful groups for their own reasons, and so on. It also appears that the increased use of maize for biofuel production has driven up the price of maize and other basic grains, but again the situation is more opaque than that, speculation and other manipulation being blamed for at least some of the price rise. What certainly has happened is that biofuel is now a dirty word. Almost everyone is happy to see that the EU, the UN, the World Bank and the G8 is talking about food security in the context of biofuels since the food riots started to occur in April this year. Just see your friends' faces crease up in disgust when you mention 'biofuels'.

So, the situation now is that far fewer people are interested in knowing that biofuel crops do not have to be maize or sugar cane or soybeans, do not have to be grown on prime cropland, do not have to be GE crops, that they can be grown on marginal land, in sewerage swamps, as one part of a viable rotation, gathered from the sea (seaweed and so on), can be processed, fermented and distilled as a small local enterprise and do not have to be (and are perhaps better off not being) converted to fuel by large transnational corporations. David Blume shows quite convincingly that as long as we do not fixate on biofuel from edible crops grown on prime cropland using 'modern' energy-intensive agricultural methods, and do not allow big business to control everything from the field to the end-user, then we will not have a problem fuelling basic necessities for a fairly good lifestyle..

You don't believe me? A few examples:

Cattails: Blume gives the example that 15 ha of cattails (Typha sp.) can treat 20 million litres of secondary sewage a day. It is possible to produce a total of over 90,000 litres of ethanol per ha from the rhizome by ordinary fermentation and the leaves and stem by cellulosic processing. To get an idea of how productive this is, Blume asks us to suppose that 2580 ha of cattail ponds be used to treat the sewage for each US county (there are 3141 counties in the US). That would result in over 750 billion litres of alcohol. The US annual gasoline consumption is about 540 billion litres12. (p.127) Energy needs to be used in the processing of the cattail rhizome, leaves and stem. This can be supplied by wood, providing forests are managed sustainably. Quite appropriately, some communities will not want to harvest cattails grown as part of the sewerage system as they will want to return the sewerage (human wastes) to the land.

Kelp: Could produce close to 340 billion litres of bioethanol a year just from the coast of California. (p.159)

Castor beans: Jatropha curcas L. I have some personal experience with this. The photograph in Blume's book (p.125) does not look like the same plant, but the description fits. It is a low tree, two to three metres in height. The fruit looks like a black plum, and it contains a nut that is 33-35% oil. The nut can be chopped, dried, pressed and filtered to give a diesel fuel. No processing, no machinery, except for the end-use diesel engine. Incredibly low-tech. Planting 1250 Jatropha trees/ha, gives 10,000 kg of nut per harvest, 4 kg gives 1 litre of diesel oil, so 2500 litres are harvested per ha for each harvest. However, the tree is often planted as a hedgerow around fields or gardens, or along roadsides, taking up zero cropland.

Feel better now?

5. Defining the broad strategic horizons

The role of the G8 has always been to define the broad strategic horizons through which the next wave of planetary capital accumulation can occur13.

So what is so subversive about all this? The feature of Blume's vision of biofuels, especially, bioethanol, is of course its decentralized and democratized vision of energy production. G8 leaders have a problem with this? According to the authors of The 2008 G8 on Hokkaido, a Strategic Assessment:

It is critical to bear in mind that the ultimate aim of their (G8) policies is never to create community but to introduce and maintain divisions that set common people at each other's throats. The neoliberal project, which has been their main instrument for doing so for the last three decades, is premised on a constant effort either to uproot or destroy any communal or democratic system whereby ordinary people govern their own affairs or maintain common resources for the common good...13

Blume's vision represents a real alternative to corporate-monopolised energy provision; and therein lies its greatest sin:

Alternatives shatter the sense of inevitability, that the system must, necessarily, be patched together in the same form; this is why it becomes an absolute imperative of global governance that even small viable experiments in other ways of organizing communities be wiped out, or, if that is not possible, that no one knows about them... If nothing else, this explains the extraordinary importance attached to the security services and preemption of popular struggle. Commoning, where it already exists, must be made invisible. Alternatives... must be made to disappear, if not squelched or destroyed, then marginalized to the point they seem irrelevant, ridiculous13.

For me, that just about sums up where we are going, but I want to make a few more comments.

1) With the global food and fuel situation stitched up as described above, I think the abolition of cash and introduction of electronic money only will provide sufficient control of the global population for microchipping of the population to be not even necessary. The replacement for the US dollar, the amero, thought to be the new currency for the upcoming 'North American Union' of Canada, USA and Mexico will perhaps be the first electronic-only money?14

2) For the last few centuries the global game has been 'growth'. Now that the end of cheap and geographically/geopolitically easily available fossil energy resources is in sight, and for many reasons 'growth' appears to have outlived its usefulness, the new game is now 'world population control'.

3) Remember the 'new ice-age' scares of the 1970s? Nevertheless, climate change appears to be really happening and possibly cannot be stopped. Are the people who attribute climate change to sunspot activity and not CO2 or CH4 and other greenhouse gasses wrong? They might not be. And anyway what better way to "fight" global warming/climate change than to be able to control the fuels and to be relying on the most carbon neutral fuels, bioethanol/biodiesel, for liquid fuel, and 'renewables' for electricity. (There's always wood/charcoal for some other uses.) Draw your own conclusions.

4) There has been a green debate on 'crash or soft-landing'. Interestingly, the above scenario appears not to be on the 'crash - soft-landing' spectrum, but something quite different. Population control, while maintaining the infrastructure for the elite, fuelled with biofuels and kept in place with electronic money. Microchipping being the 'final solution'. Neo-feudalism. Population crashes may occur in some areas that are irrelevant to the elites' needs.

5) Some have suggested that high energy prices cause increases in transportation costs15, offsetting lower labour costs in other countries (one of the main reasons for globalization), and that therefore the globalization project is on its knees and about to collapse before our very eyes. I think not. The answer is to use labour where the production is most convenient, but reduce the labour costs there. This agenda will do exactly that.

6) What to do as we approach the fork in the road to a feudal agrisystem or self-sustainable communities? Many are pointing out that those who have the power are troubled by the prospect of MASSIVE disobedience by the populace. Why bother with all this control if it were not so? However, as the man from Kentucky said, "You can't get there from here." What do you think? Is it still possible that large numbers of us will stand up and resist corporate rule, or are we already down for the count?

Notes:

1. See the Statements

2. See information, unfortunately in Japanese only, on the plant. Several similar plants are being built or are just starting up in different locations in the world. The technology has now become fairly well established and high energy prices are making the process economically viable. Note that the costs of the feedstocks for these processes do not necessarily rise as food prices rise and that they often produce their own process energy, so the cost of producing the ethanol is not necessarily linked to oil prices.

3. For a review of biofuel production energy balances, please see the two files attached below. The pdf file is a fairly short review, about 12 pages including the tables and references, and the Excel file is the data from the papers reviewed all converted into (unified) metric system units in order to make comparisons a bit easier. The Excel file shows the conversion factors and how everything was calculated. Please leave a comment to this article if you see any mistakes and so on. Thank you.

4. Pimentel, David, Ethanol Fuels: Energy Balance, Economics, and Environmental Impacts are Negative, 2003.

Pimentel, David and Tad W. Patzek, Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower, 2005.

Lorenz, David and David Morris, How Much Energy Does It Take to Make a Gallon of Ethanol? August 1995.

Shapouri, Hosein, James A. Duffield and Michael S. Graboski, Estimating the Net Energy Balance of Corn Ethanol, 1995.

Shapouri, Hosein, James A. Duffield, Andrew McAloon and Michael Wang, The 2001 Net Energy Balance of Corn-Ethanol, 2004.

EPR is energy obtained divided by energy used to obtain the energy. 1 means that the energy obtained was equal to the energy used to obtain it, so there is no net energy gain. Below 1 means that less energy was gained than the energy used to obtain it, net energy loss, and above 1 means that there was a net energy gain.

5. Lignocellulose, the structural material that comprises much of the mass of plants, is composed mainly of cellulose, hemicellulose and lignin.

6. For a much more thorough discussion of the problems of the current
bioethanol system, see Alice Friedmann, Peak Soil

7. "In mechanical terms, matching the 1985 power of American tractors with horses would require building up their stock to at least 250 million, 10 times the record total of the 1910s. Some 300 106 ha, twice the total U.S. arable land, would be needed to feed the animals." Smil, V., General Energetics, John Wiley and Sons, 1991, pp.233-234.

8. See a video of the entire speech by Al Gore, about 27 minutes.

9. Information in English on Japanese population available at the website of the National Institute of Population and Social Security Research. Especially, see page 1 of the huge (22MB) pdf file "Population Statistics of Japan, 2006"

10. For information on grain productivity, see the Japanese "World Food Situation and Japan's Food Security". For a critique of the Green Revolution, see, e.g. Siva, Vandana, The Violence of the Green Revolution, Zed Books, 1991. This wiki page on the Green Revolution is interesting and provides more references.

11. For information on litigation against farmers, see: Center for Food Safety, Monsanto vs. U.S. Farmers for a full pdf file, and the experience of Percy Schmeiser or just enter the keywords "Percy Schmeiser" into any search engine.

12. The Energy Information Administration gives U.S. motor gasoline consumption as 390 million gallons per day in 2007. Multiply by 3.7854 to convert gallons to litres and then 365 to give the value for one year results in 539 billion litres.

13. This intereting but quite long document, The 2008 G8 on Hokkaido, a Strategic Assessment is well worth the read for one perspective on what is going on.

14. See, e.g. North American Union for background on this issue.

15. See Elfael's Another World is Inevitable, But...

In the early 1970's, a book titled "The Limits to Growth" was published, a report by the Club of Rome on the predicaments of mankind. Ultimately translated in 30 languages, it caused a furore, predicting that should civilisation continue on its present path, it would run out of every resource under the sun, causing a collapse of society and a major dieoff of human population.

Over the past few years, many, no, almost all economists have lambasted this report, usually misquoting it completely and erroneously saying civilisation would, for example, disintegrate by the year 2000. In fact, the computer models described in "The Limits to Growth" predicted that within a period of 100 years from its writing, there would be famines, shortages of resources, and world population would greatly reduce. Because 'nothing has yet happened', the report is lampooned as the literal poster child of misinformed "Malthusian" type thinking that misled many people into believing the end of the world was nigh.

So then, thirty five percent of the way into this Century of Doom, how are we faring?

Not well is how I perceive it. Everything the Club of Rome predicted is bang on target. Already, economic growth world wide has caused the supply of many essential resources to fall short of demand. The three that concern me most are water, food, and energy. The immediate result of this in a free market is to cause the price of these resources to go up, sometimes dramatically such as oil.

We live in an increasingly complex societal system in which everything is interconnected, and as a result the failure of any one single component can cause the failure of the entire system. A major failure of the electricity grid, for instance, would cause the failure of the sewerage system, not to mention water supply to your taps.

As a rule, when it comes to resources exploitation, we always go for the easiest ones first, what I call the low hanging fruit syndrome. It's like picking mangoes. You always start at the bottom of the tree, then you have to start climbing the tree to get more, only to discover that the bats and the birds have got at them, and by the time you reach the top they're all rotten. Well, all the low hanging fruit has now been picked. Politicians are now clutching at straws in their insistence we must keep growing at all cost, even if it means, as an example, building a dam on the Mary River. So, what should we do?

1. Education. Everyone ought to get educated about where their food and energy comes from. 90% of all store bought food calories are sourced from fossil fuels, and when these become scarce and expensive over the next five years, we have to find new ways of feeding ourselves, organically. http://www.fromthewilderness.com/free/ww3/100303_eating_oil.html
2. The big switch. Cars are dinosaurs. It doesn't look like it now as governments encourage freeways to airports, but public transport must be increased dramatically whilst we still have enough oil to build the infrastructure with.
3. The other big switch. We must switch to renewable energy, as soon as possible and as much as remaining energy sources will allow. Our house runs 100% off solar power, if we can do it, anyone can do it.
4. Relocalise. Believe it or not, a lot of bananas grown in Qld (even those grown in Tully) go to Melbourne to be sorted and sent out all over the country, including back to here on the Sunny Coast. Our hinterland has the capacity to feed us all if properly managed, much land is wasted for housing development.
5. Farmers' Markets. Centralised markets, such as the one in Brisbane, are only doable when we have ample supplies of cheap fuel. With Peak Oil now almost certainly behind us, this must cease, we have to source our food, the water used to irrigate it, and the fuel for distributing it, locally. Sugar cane could again be grown locally to fuel the trucks needed to move the hinterland crops to our coastal strip's Farmers' Markets.
6. Use energy much more efficiently. I estimate that 80% of all the energy used by household is squandered. No one likes the idea of austerity, but austerity is what we need to aim for in a world constrained with ever diminishing energy supplies. Our household uses a mere 20% of the average electricity consumption, and we certainly do not do without. We are aiming to reduce this further!
7. Work less. You all work too hard (I don't work at all, at least for wages!). It is my opinion society works to borrow money, so as to consume stuff it doesn't need, to impress people we don't even know. And most of the stuff we consume ends up in landfill. Families today are half the size they were 50 years ago, yet our houses are twice as big. Why do we do it?
8. Downsize. Look around you and ask yourself, "do I need all this stuff?" When we moved from Brisbane, we threw out two and a half
   tonnes of junk....
9. Forgive debts. This economic system is doomed to fail. Capitalism relies on economic growth so that interest on debts can be repaid. Growth is finished. Maybe not today, nor tomorrow, but soon, because all the growth we have experienced over the last 75 years is entirely due to a supply of cheap and abundant fossil energy, and that energy is already waning.
10. Permaculture. Google it. Permaculture is a design system which integrates all the things around you so as to satisfy all your needs, food, housing, water, energy. This is done so as to waste nothing, whether that be land, water, energy, or even your precious time. Permaculture fosters happiness and an immense sense of satisfaction that what you are doing for your survival is totally sustainable, and totally within your control. It's freedom from the slavery and drudgery of modern life. No driving in traffic, no ingesting food that slowly kills you, more time for family ties.

See also: A McKillop, General editor with Sheila Newman co-editor, “The Final Energy Crisis - First edition”, Pluto Books, ISBN 0745320929

The Next Oil War is likely or increasingly possible because the old, mature, or ‘post-industrial’ urban consumer societies, and the burgeoning new and emergent industrial economies of the planet are totally dependent on oil gas and coal. One of these big chunks of Humanity will have to rival the other for a bigger share of a smaller fossil fuel supply pile. However, burning fossil fuels in vast quantities not only ensures fast depletion and possible armed conflict, but also and surely causes the climate change some citizens, and some politicians in most of these countries claim to regard as a serious problem. By a whim Jurassic geology, most remaining oil and gas reserves are located in the Middle East and central Asian region. Very logically, almost surely any subsequent and probably final Oil War following those that occurred, or continue in the region since 1991 will also occur in this region. This is a geological fatality.

Particularly in the ‘post-industrial’ societies of the OECD, awash in an ocean of cheap industrial goods made with, and operated using oil, gas and coal-based energy, many persons claim they aspire to "ecological lifestyles" and protection of the environment. This is not only a form of mass schizophrenia, but also an increasingly acute and politicized question, simply because the consumer society industrial-urban lifestyle, whether ‘post-industrial’ or ‘new industrial’ is extremely energy and resource intensive. This results in a stark real choice – political speeches, or posturing at G8 summits lauding “sustainable development and renewable energy” is finally no substitute for measurable and concrete action. This must target, and achieve reduction in average fossil energy consumption per capita. Action must start soon.

Kuwait’s liberation from Iraqi occupation in 1991 was hailed by the markets as a triumph for cheap oil and a signal for ‘exuberant’, almost daily increases in general stock values on major markets. Today, however, Kuwait and other GCC countries focus alternate energy investing as part of their After Oil strategy. Kuwait’s national oil corporation reportedly admits and accepts national oil reserves have been heavily over-estimated, and may only be about 43 Billion barrels remaining (reported by Petroleum Intelligence Weekly in 2007). World consumption in 2008 will be about 32 Billion barrels. Apart from any other factor, the actual size of remaining reserves, and the extreme high rate of extraction makes it possible to conclude that full and final depletion may intervene before any final Oil War could be started – thus preventing this war from occurring!

#UnsatisfiedDemand" id="UnsatisfiedDemand">Unsatisfied Demand

This no-war outcome due to “the prize’, abundant oil reserves, disappearing before the final oil war can be organized is however unlikely. To be sure, “ecologically correct” lifestyles are media friendly, and appeals to these lifestyles are larded into the political speeches of economic growth-chasing political leaders, who know exactly what their consumer and voter masses really want. That is a new car, flat screen TV, suburban swimming pools, cellphones with permanent Internet access, jet travel holidays in faraway but cheap tourist locations, and mountains of plastic, metal and cheap food produced using several barrels-equivalent of energy per hectare cultivated. By direct consequence, economic growth must continue!

This permanent quest for more of everything automatically assumes – in fact demands and imposes – that there will always be more oil to satisfy this expression of individual and collective greed, schizophrenia and ignorance of ever clearer limits on satisfying this primitive urge to overconsume. Kuwait may almost ashamedly avow that it lied about its oil reserves, perhaps to spur its Western oil consumer ‘friends’ to chase out Iraqi invaders 17 years ago, so Kuwait can continue producing at least as much, perhaps more than previously. The same ‘performance logic’ is applied to any other oil exporter country, except Russia and because of its thermonuclear weapons, ballistic missiles, and rather evident willingness to exert its newly regained Oil and Gas Power on the world stage. Bullying Russia into ‘performing’ better at more quickly exhausting its national oil and gas reserves and driving down world prices, and its revenues as a result, is not on the table, but for the others, it is.

As we know, this farce is operated “because there is no alternative” and despite the vast emissions of greenhouse gases it produces being officially, today, described as ‘regrettable’ or ‘critical’. At worst this mass schizophrenia is fantastic hypocrisy, and terrible confusion at best or least. In this antinomic and irrational political, social and cultural context, both rational and irrational decisions can be expected. One of these decisions, from a nexus of rational and irrational being interwoven and seamless can easily be the Next Oil War. This would be launched by consumer nations against some ‘underperforming’ oil exporter. Another strand of irrationality, and already a discredited kneejerk ‘response’ to oil crisis, well documented in the 2005-2007 period from boom to slump, was the attempt to massively develop the agrofuels or biofuels. These food crop-based and of course ‘low carbon’ fuels would, under almost any hypothesis, never have provided more than insignificant quantities of oil saving fuels for the Apocalypse Wagon, or family passenger car. Many billions of dollars were however poured from the pockets of investors into their development, to little avail. As oil prices rise, so does the cost – and alternate value as food and feeds – of their ‘basic feedstocks’, the grains and vegetable oils.

#NewKuwait" id="NewKuwait">New Kuwait or North Korea?

Since late 2005 and increasingly ever since, agrocommodity prices reflect, and agroindustrial investment analysts underline the new trend for "full barrel price indexation". In other words the main crops used, or potentially to be used for producing fuel ethanol and biodiesel oil, to save petroleum-source gasoline and diesel fuel, now reflect their real, or future potential alternate use for feeding cars and vice versa, letting the car starve. The biofuels boom-slump cycle was short, no more than about two years, but at least serves to educate the consumer masses that they really do have a choice: to drive or eat. This decision has already been made, by force majeure, in North Korea and Cuba, cut-off from cheap Soviet oil when the USSR collapsed.

North Korea, in particular, pursued copybook Soviet and Western ‘modern agriculture’ development or the massive substitution of oil for manpower, draught animals, crop rotation, composting and all other ‘primitive and traditional’, non-mechanized forms and methods of industrial food production. Far behind Japan but close to the USA in direct oil intensity of its food production, North Korea in the 1980s utilised about 1.75 barrels per hectare every year, specially as fertilisers, insecticides and pesticides, as well as for irrigation, agricultural machines and road transport. Today it uses about one-half that amount – and starves, although it does possess rudimentary atom bombs and exportable if rustic ballistic missiles, if not all-year and all-day electric power supplies from its mostly oil-based power stations, chronically short of fuel. Cuba, a little less drastically, has also been forced to make adjustment to reality, severely cutting both direct and indirect oil intensity of its agriculture. Its poverty but nice climate makes this an ideal location for low cost holiday flights from the “ecologically concerned” OECD postindustrial countries, of course not including the USA, for ideological reasons.

Not for ideological reasons but simply because oil prices have started to reflect reality – in particular there are no easy and cheap substitutes and reserves are declining – even the postindustrial countries are beginning to pay more for their food. Since they essentially ‘eat oil’ this is no surprise for anybody able to scan a list of energy inputs to ‘no alternative’ modern food production, distribution, its predatory soil mining, biodiversity destruction and complete unsustainability. A future more like that of present-day North Korea or Cuba will however be a very bad surprise to the average innocent consumer, and rather difficult to manage for their current-crop leaderships. Much more attractive to some, an exemplary and quick war aimed at ‘securing’ oil supplies ‘at reasonable prices’ will almost inevitably bubble to the surface in the mind of our decision making elites and be faithfully trumpeted by every government-friendly and patriotic media outlet.

See: www.energybulletin.net/node/45944.

#ComingFast" id="ComingFast">Coming Fast

World consumption of fossil or mineral petroleum and 'fossil hydrocarbon liquids' in 2007 was about 5150 Billion litres or around 4.8 barrels per head of world population. The world's two biggest biofuel programmes, or industries, in Brazil based on sugarcane ethanol and in USA based on maize ethanol, produced a combined total of about 38 Billion litres of anhydrous ethyl alcohol the same year. The European Union biofuels program targeted 5.75% by volume of all European motor fuels being substituted by 2010, mostly based on rapeseed biodiesel, but is now in the process of being ‘disowned’ by most political decision making elites, due to its sheer uneconomic performance. A more rational target could be 0.5% or 1% on a sustainable basis.

Any increase in petroleum demand, even tiny fractions of one percent, sets yet more impossible targets for biofuels expansion. This is at least in the real world of ‘current generation’ biofuels based on food crops, and not the fantasies of ‘next generation’ biofuels produced from using miracle plants not needing irrigation, pesticides, agricultural machinery and only the slightest processing energy – for example jatropha curcus. In addition, world consumption of motor fuels is locked on to the growth of the world car and vehicle fleet, increasing at about 55 million units per year. Excluding their production, which is in no way low energy the annual increase in oil demand, only for motor fuels, due to fleet expansion, can be estimated at about 85 Billion litres, equivalent to about the fuel value of 110 Bn litres of anhydrous fuel ethanol. From this, we get an idea of how far the biofuels – or the ‘next best hope’ of electric cars - have to go, and grow, to start representing a credible alternative to oil.

We can note that even to hold the not-so-impressive rank of 1% bioethanol/99% fossil petroleum in world car fuel terms, the world's two-biggest bioethanol production industries would have to increase output by stellar amounts. Supposing, for example, that Brazil and USA were to expand their annual bioethanol output at the rate of world motor fuel demand growth, then in 2007-2008 their mission impossible target increase would need to be about 400%. Taking a more rational target, and assuming the world's two biggest biofuel industries targeted firstly achieving 5% of world motor fuels supply in volume terms, and then maintenance of this 5% part of the total, their combined output will have to grow at a sustained rate of at least 25%-per-year for more than a decade. Long before this, Brazil would run out of sugar and Amazonian forest to clear for grazing cattle displaced by sugarcane growing expansion further south. And the US would run out of maize and the water to grow it. This is the simple reality behind the 'biofuel revolution' and reason for its very quick end.

World oil production is facing an exactly similar mission impossible. So long as there is any growth in the system, so long as more people eat more industrial food, drive more cars and fly more planes, consume more plastic and metal, and continue being good industrial-urban consumers, we will get closer to the point where supply is in permanent shortfall. Very surely, promoters and defenders of the ‘alternate and renewable energy revolution’ will point to encouraging signs of massive investment intentions and cashflow projections, and spiraling mergers and acquisitions in ‘New Energy’. But on the ground and in the fuel tanks of the world's approximately 975 Million car equivalent road and off-road vehicles, ocean shipping fleets and 25 000 Boeing 767 and Airbus A320-size planes it is fossil petroleum, either liquid or LPG, which makes around 98.5% to 100% of these vehicles operate.

For market traders and operators in the arena of formerly dual-use, but now again simple food commodities the time is ripe for testing new 'psychological price ceilings', due to oil’s recent and proven ability to grow about 33% in price over 6 months. Soft commodities still have some way to go in catching up the hard commodity boom, itself driven by and dependent on rising oil, gas and energy prices, and sometimes-rapid depletion of orebodies and exploitable reserves. Almost unknown to the minds of media commentators and business analysts, the entropy-linked requirement for oil and energy prices to keep moving higher in order to make intrinsically low-performing substitutes feasible or ‘economically attractive’ is the only way forward for alternate energy. By doing this, they could drag the biofuels and electric cars, solar electricity, geothermal heat or other alternate energy ‘solutions’ behind them, into the realms of long-term economic feasibility - as opposed to their present de facto role as vehicles for short-term financial and speculative trading interest. The bottom line cost, of course, is to spend more of personal and national income on anything containing or using energy, and less on the trinkets and gadgets so prized by economic growth fanatics.

#Overheads" id="Overheads">Beware of Overheads

Infrastructure and overhead energy costs, in the OECD countries, and increasingly in the Emerging Economies are either extreme high, or very high. The survival value of the whole production process is therefore low. Without cheap, or at least abundant oil and gas, the construction and operation and maintenance or current production systems and their infrastructures is compromised. The successive shells or layers of the urban industrial consumer economy, that is economic infrastructures, have high or very high embodied amounts of energy, and this dependence increases as we mount the successive infrastructure layers, due to previous shells or layers being energy intensive. The much touted image of cellphones as ‘jumping the infrastructure barrier’ of landlines made from copper and recycled tree trunks, is a classic claim of those profiting from placing extreme high frequency emitters close to the brains of children and adults.

In 2007, around 10% to 12% of US total electricity consumption was swallowed by Internet and cellphone, portable computer and pager systems. Some 55% of US electricity comes from coal-fired power stations, burning hundreds of millions of tons of rail shipped coal each year. Champions of the ‘mobile office’ and the ‘communication revolution’ sometimes call this the ‘dematerialized’ economy!

Embodying and incorporating abundant and previously cheap fossil energy in productive and support infrastructures of the economy, these structures and economic processes need energy to be maintained, operated and renewed. Without this energy supply, cheap or otherwise, the North Korean or Cuban ‘solution’ becomes the No Alternative. Unfortunately, replacing ‘current generation’ productive systems and their infrastructures with alternate energy will not be difficult, but totally impossible. Arbitrage, or choices will have to be operated, surely not by the blind and chaotic 'free play of market forces', and preferably not by Our Heroic Leader and his clique.

This reality is in fact known to many persons, even to traders, speculators, and business analysts who track big spending on alternate energy, 'to save oil', in their market surveillance. It is also known to the scientific community, but care is taken by politicians and the media to avoid clearly spelling out such fatal and total weakness and dependence to Average Joe Citizen. Even less spoken of are the concrete, real world results of failed energy transition. In particular, as we have discussed elsewhere, these include oil war, military invasion, and mass killing in the wider Middle East and central Asian (MECA) region, triggered by failed attempts to increase ‘pumping performance’ and supply of real world petroleum for the real world, fatally doomed economy.

#PartyingOn" id="PartyingOn">Partying on with Alternate Energy Investing

The continued growth of the 'alternate energy boom' is entirely linked to the oil price. What is required is an oil price near the pain threshold, but well below the panic level we can place at around 150 to 200 USD/barrel. After the panic level is attained, the world economy will enter into troubled but classic waters of deep economic recession, cutting oil demand, and shaving its price. This is the ‘slump dividend’ for surviving consumers!

Sufficiently intense world economic recession can however easily result in only the war option for improved oil pumping ‘performance’ from exporters being retained. But we could also argue the opposite may ensue through reduced needs for energy in the slowed world economy, plus the ‘prudence premium’ on ray-jeem changing underperforming oil pumping countries ‘for their own good’, but finding they produce less for some while after their military ‘liberation’ and democratization. We can conclude that if we stay inside the pain threshold price, below 150 USD/barrel, fast development of many alternate energy sources and systems will remain a healthy new business. It can continue to attract not only the pension funds, but the Bill Gates, Vinod Khosla and Peter Thiel or Richard Branson of this world. These extreme consumers of every imaginable fossil fuel can continue to scurry round the world, preaching 'environmentally correct energy' as well as classic ways to make more money

.

The most important future effect of the 'biofuels revolution' is however on food prices. The production of biofuels on a large, or even massive scale is unlikely, but it comes at a bad time for world agriculture and food production. In large part due to climate change, but also because of rising fuel prices, erosion and loss of biodiversity due to industrial overkill being used against the biosphere, world agricultural output has stagnated. More strictly economic reasons for stagnating world food production can also be added, for example water supply limits and declining amounts of prospective new agricultural land for raising production. Prices for basic food commodities are rising, independently of real or potential biofuel ‘feedstocks’ demand on available grains, sugars and oilseed supply. This problem is already recognised, in the action taken to develop GM non-food "fuel crops", such as jatropha and grasses (in general leguminous species) which can or might be planted in non-irrigated lands, take less existing agricultural land, and potentially use less or no fertilisers, pesticides and machinery for production.

We find there is a firm and surprisingly low limit on how much alternate energy, such as the biofuels, can be produced before danger signals are set for the growth economy. As any economic textbook will explain, the amount of "discretionary non-food revenue" available to consumers has always has been the key determinant of economic growth, and growth potential in any economy. This 'iron law' of the economy, much discussed by Ricardo, Say, Malthus, Engels and Marx, among others, is easy to understand. As the consumer cypher or Economic Man spends more of their income on food and energy, and has less to spend on Microsoft products, iPods or flights in 100% kerosene-fuelled Virgin airliners this hits company revenues and corporate profits, employees are thrown out of their jobs, company spending decreases, and so on.

The moral question of do we need to feed cars and keep modern “ecologically minded” consumers high on the barrel, rather than feeding the approximately 900 Million underfed persons of the planet is usually avoided. Likewise, the urge to do something to limit climate change is certainly present in the media, but concrete action to cut oil, gas and coal burning is not. To what extent the growth economy survives, or more precisely how long it survives is of course low-key or absent from in media treatment of the Alternate Energy Investor Boom, that is yet another asset bubble.

More important for us at this moment, in late 2008, we can note how quickly real world energy-economic limits cut into the agrofuels boom, leaving a trail of unused or underused biofuels processing plants, in the case of G W Bush’s US Renewable Fuel Scheme – unable to operate through too costly corn or soybean oil on one hand, and insufficiently expensive imported oil from ‘underperforming’ oil exporter countries on the other. This tradeoff, between food and fuel, was and is arbitrated by rising food and energy prices and their impact on the economy, political ideas and public opinion.

#WhatNext" id="WhatNext">What Happens Next

Any asset boom is under imminent threat of implosion whenever stock markets wilt in the face of reality and investors scurry to salvage what they can of the bets they that more and following gamblers would come along to the same party, bringing fresh cash. Continued growth of the Alternate Energy asset bubble therefore depends on stock markets avoiding a crash. In turn this means there must be neither an oil price crash, nor a continued oil price explosion.. If we take the second and rational hypothesis, a classic economic crisis generated by oil prices moving to 150+ USD/barrel, the crisis will trigger a cut in world oil demand, reducing oil prices. Plenty of arguments support this outlook, particularly the extreme oil and gas intensity, or total oil dependence of the OECD 'postindustrial' societies. These ultimate consumer societies are under recession threat almost any time because of the debt-driven, resource intensive, unstable, cycle prone bases of economic growth in these societies. Not only the banks and finance houses, but most home- and even car-buyers are ‘highly leveraged’, that is debt dependent, exactly like OECD governments, most of which also run big trade deficits.

Another possible cause of a serious tilt to the Alternate Energy asset bubble’s Titanic deck is simply a boom-bust sequence in the 'stock growth and decline cycle'. Exactly the same happened in a quick period with the dotcom and hi-tech asset bubble, ending in the crash of 1999-2000. Since then, the Asian economy growth explosion, mergers and acquisitions mania, the real estate bubble and its subprime afterglow, all driven by stepwise increases in world liquidity, low interest rates and consumer debt, have taken over as economic cycle drivers. This extreme fragility is unlikely to resist the ‘external shock’ of oil prices climbing to their real equivalent price of the early 1980s, corrected for competing asset prices and the US dollar’s world value. This is probably around 175 USD/bbl, in any case more than 150 USD/bbl. Reaching this panic price level will be signalled by stock exchange falling any time oil prices rise, instead of the reverse, which was the pattern right through 2005-2007, but not now in 2008.

Also, and ironically any prolonged fall of oil and gas prices can help ‘crater’ the world economy by strangling the 'real resource boom' and depriving the world economy of liquidity transfusions generated by high metals, minerals, agrocommodity and energy prices. The Alternate Energy asset bubble is therefore caught between two stools the same way Kuwait, and other small GCC petro-countries are caught between Iran and US occupied Iraq plus Saudi Arabia.

If we take the 1980-1982 shakeout or meltdown of the world economy as at least partly oil price-triggered, this recession cut world oil demand about 9.5% in 3 years. The same economic slowdown, today, would also cut oil prices until falling supply due to Peak Oil caught up. Thanks to market over-reaction or ‘exuberance’ this process would naturally be a firework show of extreme volatility, but could end up cutting oil prices to below 100 USD/bbl, wreaking havoc on biofuels feasibility and return on investment, as well as the financial performance of other alternate energy investor vehicles.

Later on, long-term shrinkage of oil and gas supplies, which will surely start from 2011-2014, intensifying after that, will finally cut world energy demand by unimaginable amounts. The economic spinoff, or economic impact of much higher oil and gas prices spilling through the economy will simply mask the underlying physical causes of economic recession. In the 'longer-term’ future of about 2015-2018, it is not certain the alternate energy sources, including biofuels will have any larger role to play than today, simply due to the world economy practicing – for force majeure – the kind of de-growth that is the only solution for fighting climate change and limiting outright destruction of the biosphere. To be sure, the percentage weight in world energy of Alternate Energy will be higher, that is rising from around 1.5% today, to perhaps 5% of a smaller world total energy demand by around 2015. Much higher food prices, simply reflecting energy prices and environment costs of current agriculture, will also play their part in economic de-growth, and mightily constrain ‘first generation’ biofuels production we can easily note. Kuwait can practice After Oil investing, with ever-increasing real need, but the Alternate Energy asset bubble may be off trader’s screens well before that!

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Copyright Andrew McKillop Jul 2008

by Sheila Newman and Richard Laverack

Why build more roads now?

Why on earth, with petroleum supplies not meeting demand and oil prices through the roof, are we still engaging in public-private partnerships with road builders???

Australia is currently set to be criss-crossed by new roads, tunnels and tollways. A case in point, which we have studied is the SEITA Eastlink tollway, which is being built by ConnectEast in a private-public partnership with the Victorian Government.

So, why is Victoria engaged in massive road construction just now? And, why are we persisting with Eastlink, all the way down the Mornington Peninsular when we could simply stop it now?

We found some strange answers to our question towards the end of a SEITA document called, "Frankston Bypass Environment Effects Statement, Strategic Transport Modelling Technical, dated 3rd March 2008, in "Clause 5.7 - Impacts of Fuel Price Changes."

"The MITM adopts current estimates of vehicle operating costs (fuel maintenance etc) on a per kilometre basis in order to assist in determining route choice behaviour. However, these estimates remain constant for forecast years (2011, 2021 and 2031) since vehicle operating costs are unknown. However, it is worth investigating the elasticity of traffic demand with respect to fuel price in order to gain insight into the effects on traffic demand if fuel prices were to change in the future.

"Table 17 shows both short and long run elasticities of demand for fuel consumption and Vehicle Kilometres Travelled (VKT) with respect to fuel price. In the long term, and elasticity value of - 0.29 for VKT with respect to fuel price would mean that a 10% increase in fuel price would result in a 2.9% decrease in VKT. However, in reality motorists adjust much more to fuel price rises in relation to fuel consumption, either through more fuel efficient vehicles or better driving techniques to conserve fuel. This situation is likely to be even more relevant for the Frankston Mornington region where limited alternative transport options exist.”

SEITA then lists its source as Goodwin Dargay and Hanley (2003), referring to "Elasticities of Road Traffic and Fuel Consumption with respect to Price and Income: a review," ESRC Transport Studies Unit, University College London.

Let's analyse those statements.

Note that, In 2002, when the 'research' into trends for that review would have been done, oil was $22 a barrel. 10% of $22 is $2.20.

If all we had to cope with now was a $2.20 increase on $22, a freeway might still make some kind of sense. Now, however, only 6 years later, oil is over $140 a barrel. This is about 6 times the 2002 price of oil and represents a rise of 536% !

What has happened here? Well, we cannot say for sure, but what usually happens is that projections are based on past trends, and, since from 1987 to 2002 prices did vary more or less only by about 10%, to assume they would go on doing so would be to base one’s projections on past trends.

But those were not the only trends in the past.

Between 1973 and 1987 prices rocketed, but SEITA and the Victorian Government are proceeding as if the 1987 to 2002 trends will last for at least another half century.

The reality is that, since 2003, prices have increased continually, and have gone well beyond any previous levels in 2008, with little sign of ever coming down to the kind of trends relied upon by the Victorian government and ConnectEast to make the tollway a profitable, worthwhile or sensible transport option.

Have a look at trends in oil prices in the graph below:

(Source is "Oil Price History and Analysis," WTRG Economics' Energy Economist Newsletter, http://www.wtrg.com/prices.htm. Prices are in 2006 dollars.)

Now why would an engineering company like ConnectEast, in the business of making roads, be unaware of the rising oil prices? Oil prices severely impact on the cost of the construction materials and the fuel used by roadmaking vehicles. Building Eastlink must be costing more every day. "Well in excess of 90% of the total construction budget has been spent," already in February 2008, according to The Age, in Simon Mann, "Long and winding road nearly ready to roll", February 16, 2008.

It would be strange if all ConnectEast's engineers and other staff, and SEITA's government advisors, were not aware of oil production curves and theory.

What of the Victorian Government - ConnectEast's partner - in tollroad ventures?

The government has received submissions and press releases from various groups about petroleum depletion projections and oil prices and there has been a Senate enquiry into oil depletion.

The Australian CSIRO study by Barney Foran and Franci Poldan, Future Dilemmas: Options to 2050 for Australia's population, technology, resources and environment, published in 2002, was already flagging problematic trends. See Chapter 4, "Natural Resources and the Environment".

The VAMPIRE study from Griffith University, Queensland, drew attention to Melbourne for its oil-reliant transport vulnerability.

Apart from that, explosive oil prices and depletion fears are constantly in the news. One would therefore be entitled to expect the Victorian government by now to be aware that business as usual has gone completely off the radar.

One has only to go to Amazon com to find a hundred or so books written in the last ten years about the coming energy and fuel crisis, most restating and reaffirming projections made for peak oil production and then decline to start around about now.

If that were not enough, in the past few days, on July 11, 2008, the CSIRO came out again and warned that the cost of petrol could rise to $8 a litre in the next 10 years.

Yet SEITA and the Government still seem to be basing their traffic projections for the next 30 years on a series of totally obsolete oil price trends. On this achronistic basis they openly state that they forecast 30,000 additional vehicles to be travelling along Moorooduc Road in five years time.

What sort of reasoning is this? How can spending $700,000,000 dollars be justified in these circumstances? And how can all the suffering by people and animals who live in the path of this freeway be justified?

After allowing for a 10% increase on $22 a litre fuel price of 2002, which they think might reduce the number of kilometers motorists might travel by 2.9%, SEITA diminish this feeble concession to reality with the rationale that motorists will deal with higher prices by using more fuel efficient vehicles or better driving techniques:

“However, in reality motorists adjust much more to fuel price rises in relation to fuel consumption, either through more fuel efficient vehicles or better driving techniques to conserve fuel.”

But, over the last six months motorists have flocked to public transport. So much so that Connex has ripped the seats out of trains to make standing room only! The metropolitan public transport network is at breaking point. There is no argument about this. The state has asked the Federal government to put funds into public transport.

What will happen if the Frankston and Mornington Peninsular region doesn’t get better public transport?
Is the poor public transport situation from Frankston down through the Peninsular one that ConnectEast, with its shareholders in mind, hopes the government will preserve? This would partly protect ConnectEast's investment. SEITA write, for a project meant to serve the Peninsular for more than thirty years into the future:

“This situation is likely to be even more relevant for the Frankston Mornington region where limited alternative transport options exist.”

This notion is problematic on a few grounds – to say the least. It would mean leaving the public to wear high petrol costs with no reliable public transport option, so that, if people could not pay for petrol, they would not be able to travel to work, shops, doctors, schools, hospitals. Presumably people would, as SEITA hopes, prioritise petrol costs in order to continue to travel for vital and income earning reasons.

SEITA does not canvas, and neither has the government, openly, the logical corollary to continuing very high petroleum prices. It is this: high petrol prices will bankrupt many businesses and leave many people unemployed or underemployed. In the short term businesses will cut whatever costs they can and pass costs on to consumers. The first cost-cut will be wages. Higher costs for products, higher costs for private transport, and lower wages and more unemployment, is a recipe for a sustained, possibly permanent economic depression. Some might describe such a situation as an economic and social collapse.

Colin Hampton,Frankston Councillor/SEITA advisor pushes for tollway through Pines Flora and Fauna

It looks like this tollway project, which SEITA says was on the Melways maps 40 years ago, has just gone out of date and should be abandoned. We could save ourselves the trouble of the last 50km or so. Yet, only a week or two ago, Colin Hampton, Frankston councilor and member of SEITA advisory council, at meeting with low attendance, pushed through support for SEITA’s Option 1, which is the one that goes through ecologically sensitive territory and divides the Mornington Peninsular in two, severely curtailing the few remaining chances for viable wildlife corridors.

What's what:

SEITA stands for the Victorian Southern and Eastern Integrated Transport Authority which was formed by the Victorian Government to manage private public tollway-construction ‘partnerships’. SEITA managed the selection of the private sector bids and now oversees the State's ongoing commitment to this project. In October 2004, ConnectEast was awarded the contract to fund, design, build, own and operate EastLink for a period of 39 years. ConnectEast was listed on the Australian Stock Exchange in November 2004.

Who's responsible

The members of the advisory council to SEITA was set up with John Nicol, as 'Independent Chair'; Janet Holmes à Court, Deputy Chairman; and Frank Corr, Northern Community Representative; Norman Galbraith, Central Community Representative; Geoff Griffiths, Southern Community Representative; Cr Mick Morland, Casey City Council; Mr Tim Tamlin, City of Greater Dandenong; Cr Colin Hampton, Frankston City Council; Mr Ian Bell, Knox City Council; Ms Lydia Wilson, Manningham City Council; * Cr Tony Dib, Maroondah City Council; Cr Craig Shiell, Monash City Council; Cr Tim Rogers, Mornington Peninsula Shire Council; Cr Chris Aubrey, Whitehorse City Council.

The responsible minister is John Pallas, Minister for Roads and Ports.
Your Victorian leader is John Brumby.

(See also: “What Can YOU Do To Stop Road Tunnels Destroying Royal Park and Democracy?”
“Roads to wildlife extinction,”
“Wildlife Campaigner: "SEITA preferred Frankston bypass route will severely impact wildife"”)

Word is that Melbourne is getting its 1 million more ten years early and that the Vic Government is in a panic because it has no idea how many permanent new guests have taken up its foolhardy invitations to come and stay. Who the hell is responsible?

Melbourne 2008: Living in a destruction zone

Once Melbourne number plates bore the motto, "The Garden State."
Then we got Kennett's formula, "Victoria on the Move." It sounded like some kind of unnecessary laxative, prescribed by a mad surgeon. Kennett tried to beat population up and, unfortunately for us, stopped the Victorian diaspora to Queensland. I guess he prepared the way for what Bracks did to Melbourne. Him and the editors and senior writers of the Fairfax and Murdoch press, who nagged shamelessly for population growth.

Since the Bracks Population Summit (2002) the Victorian government have ranted continuously and illogically about how we 'have' to have 1 million more Victorians. For local councils, population Projections exist in two forms:

Council data only go to 2011
ABS "Victoria in the Future" (VIF) series go to 2031.
But ...
The ABS has just discontinued VIF figures in circumstances which could mean that Victoria's actual growth has overshot both target and projections and has shot into the stratosphere. The word is that we are getting our 1 million more ten years early and that the Victorian government is in a panic because it has no idea how many permanent new guests have taken up its foolhardy invitations to come and live here.

This is almost certainly the reason for the hasty attempts to introduce draconian new "no-go", "slow-go" and "go-go" residential areas (now described as "areas of 'limited change', 'incremental change' and 'substantial change'.

“What I tell you three times is true.”
(Lewis Carrol, The Hunting of the Snark)

One of my most difficult tasks in writing about these matters is to overcome the propaganda which says that we must have economic growth and that for economic growth we must have population growth.

The Federal and State governments and the news-media repeat this all the time, despite much contrary evidence, and most people believe it because they have no other source of information.

On the one hand the State Government actively seeks to attract more and more immigrants to Melbourne.

On the other, it pretends that population growth is some irresistible force over which it has no control and for which we must all make way no matter what the demands.

Verify this by going to the Victorian Government’s immigration pages at http://www.liveinvictoria.vic.gov.au
Here's a sample of www.liveinvictoria.vic.gov.au:

and there is a special page to assist private immigration agents.

Yes, your government is really working overtime to overpopulate this country.

Alice in Victoria

Asking the public to accept massive intensification of infrastructure, huge cost increases, and loss of rights and space, and nature, on the grounds of a responsibility to reduce greenhouse emissions whilst bearing government imposed, unnecessary population growth is an Alice in Wonderland task.

Alice laughed: "There's no use trying," she said; "one can't believe impossible things."
"I daresay you haven't had much practice," said the Queen. "When I was younger, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast." (Alice in Wonderland.)

But the Government is asking of the public to believe impossible things through the Melbourne 2030 program. Even the so-called independent auditors of Melbourne 2030 keep up the ridiculous charade:

Whilst recognising that almost everyone except developers hates Melbourne 2030, the ‘auditors’ of it write in their ‘independent report’:

“At the same time, local communities must be prepared to take a broad metropolitan view that recognises the necessity of urban consolidation,” they write, giving the reason as:

“(…)the urgent housing need resulting from unprecedented population increase and the need to reduce travel and greenhouse emissions to meet our responsibilities towards climate change.”

But even the Auditing Committee shows some unease, although not enough to save Melbourne or to question all the growth. They wrote:

“The recently released report of the Ministerial Working Group Making Local Policy Stronger (June 2007) and the subsequent State Government Five Point Priority Action Plan recognised community concerns in relation to existing residential zones. It proposed a way forward by enabling the identification of ‘no-go’, ‘slow-go’ and ‘go-go’ residential areas (now described as areas of ‘limited change’, ‘incremental change’ and ‘substantial change’) (...)”

“We would caution strongly, however, that the implementation of the five point action plan will not ease community tension unless local communities play a significant role in the application of new zones.”

Is conning the public going to make up for oil depletion and water scarcity?

Analyse the problem:

• Growing the population and expanding infrastructure will increase the number of car trips and the distance travelled.
• Modern high-rises are power-hungry.
• Building upwards increases the electrical power requirements for air conditioning, heating, drying clothing, moving things and people up and down in lifts and pumping water upwards.
• It is harder to cool and heat high-rises and it is harder to cool large, dense cities.
• Reducing vegetation reduces rainfall and cooling.
• Reducing access to land deprives people of access to vital resources when governments fail (as they invariably do.)
• Our Victorian government has already failed us by overshooting our water supply. It has attempted to supplement that supply by costly, power-hungry technologies, notably desalination. It has undertaken in ignorance an impossible promise to deliver these with alternative technologies.

Analyse the propaganda

We are running out of water, fuel, and affordable food; native flora and fauna are threatened, and democracy has been sacrificed to growth.

Driving these problems is Melbourne 2030 in its role as a vehicle for imposing massive population growth.

But what is driving Melbourne 2030?

Population growth via immigration is not, as we are led to believe, a kind response to the starving millions of the world.

And it is not to create a better world for the rest of us.

• Apart from a small number of refugees, the immigration program is actually all profit-driven by big business in Australia. The profit goes to a corporate and investor caste well out of the reach of the middle and the working classes.

• The number one profiteers in population growth in Australia are international property developers, which include Finance, construction, real-estate, engineering.

The 2002 Bracks Population Summit …

…was largely auspiced by Property Developers, in APop (The Australian Population Institute) and mortgage financiers. As well as Australia’s mainstream Press – Fairfax and Murdoch - which own www.realestate.com and www.domain.com.au, Mr Richard Pratt and Mr Steve Vizard, both involved in criminal activities for financial gain, were very prominent in this event.

Perhaps the two biggest peak bodies currently coordinating government lobbying on population growth to advantage the industries they represent are:
• The Property Council of Australia
• The Australian Academy of Technology and Engineering Sciences (working with the Scanlon Foundation and the Australian Multicultural Foundation.

Here are the main aims of the Property Council of Australia, from their own document, "Powerhouse 2010 Update" downloadable as a powerpoint file here

Don't you love it! Melbourne - and the rest of Australia - under permanent construction.
Ah, the excitement of choking traffic in the mornings; the challenge of breathing in that dust.
The joy of watching your favourite piece of nature paved over.
The engagement of foregoing sleep to write useless submissions to your local member and state government.

Gee, our taxes at work! 33% of my wages. And then, on top of that, there are those rising council rates, that burgeoning homelessness, those skyrocketing rents, those outrageous property prices, that choking traffic...

And, here is their latest 'branch' member - the Victorian Government.

The Problem: Organising against population growth, dispossession and life-threatening hardship as oil and water deplete.

The mainstream media and government are corporatised and represent the interests of the corporate world. We cannot rely on them for information, guidance or to organise. We need to communicate outside of them: Internet, word of mouth, books, films, meetings and markets.

Organising requires comunication between neighbours and kin and power at a local level.

Default human social structure is along kinship lines of family and clan.

• Local Communities with a history together and especially with intact or strong kinship structures have the best chance of organising to survive well.

• Current land-use planning and population programs structurally split- up communities and prevent them from organising.

We need to challenge local laws that stop us having livestock and water for growing food.

• We need to re-design our communities so that we can grow food and keep domestic animals.

• It is vital to get back and conserve full use of suburban land and water. So look out for ways to do this.

The government is public-private corporatising rural land and giving more and cheaper water to their agribusiness program. Agribusiness does not care about you and me; agribusiness quotidienly watches people starve. That is why we have to fight government attempts to retain our water for other uses. We need it.

Laws should be primarily for benefit of local communities, then integrated into region and continent

Inheritance and Land-tenure systems need reform along Roman-law lines, like Western Continental Europe.

Roman-style laws
• Preserve land within families
• Share land equally between men and women
• Minimise land fragmentation and speculation

Basically this means that our inheritance system and land-use allocation and planning system need reform towards:

• male and female equal inheritance,

• prohibition against disinheritance of children (legitmate or illegitimate), and

• leasing to substitute for land-sales

Remember:

Cheap goods are the baubles to seduce and distract today’s indigenous populations.
Today’s indigenous populations are us.
We who were born here.
Let us not be distracted by beads and baubles.

• Land with water and a stable population and society are what counts.
• Land speculation is a mug’s and a con-man’s game.
• High profits in any field are not sustainable in the long term.
• No society that encourages one class to profit at the expense of all the other citizens is sustainable.

In recent years, newspapers of the Murdoch-owned News Limited media empire haven't been in the least shy in counselling, indeed demanding of Governments to disregard the will of the public to implement policies it deemed to be in the public's best interest. One obvious example which springs to mind is the Australian's strident endorsement of the current attempts by the Iemma Government to privatise NSW's electricity assets, even though it's opposed by 85% of the public and even though when privatisation was last specifically put the the NSW public in the 1999 elections by the Liberal Opposition they were roundly trounced. Other past examples include the Murdoch press's campaigns for:

• The privatisation of Telstra;
• the (aborted) privatisation of the Snowy Mountains Electricity Corporation
• The forced amalgamations of local governments by the Queensland Beattie state government in 2007
• Calling on the Queensland Government to use dictatorial powers to over-ride local councils opposed to over-development who were elected in in the March 2008 elections.
• Rebuking of Anna Bligh for using powers to prevent the destruction of the historic Regent Theatre by developers

The editorial Protection in name of popularity of 26 Feb 08 in the Murdoch-owned Courier Mail concerning Bligh's decision to save the Regent Theatre, complained:

But is it possible that this whole exercise is less about protecting fond memories and more about good old-fashioned, politically motivated playing to the crowd?

However on other occasions, when it suits the Courier Mail editorial writers, “playing to the crowd” is precisely what they demand of our political leaders. Take for example the editorial Rising costs an expensive issue for PM of 23 June.

The editorial seems to be part of a growing pattern in the Murdoch Press which appears to be directed towards undermining the popularity of the Rudd Labor Government in the face of the growing global economic and resource shortage crises. Even though the current Federal Government cannot possibly be held responsible for these and even though the Federal Opposition is not proposing policies to deal with these which are likely to cope any better with these crises than those being implemented by the Federal Government, the Murdoch press appears to be attempting to engender the idea in the Australian public's consciousness that it is appropriate for them to automatically punish whatever Government in office when things turn sour. So stories and opinion pieces such as this editorial, which seek to imply that the Rudd Government's honeymoon with the Australian public is over are becoming more common.

The editorial begins by noting that more people now consider Labor (53%) to be better economic mangers than the Liberal opposition(37%).

However, astonishingly, it proceeds to argue that Labor, having finally convinced the public after many long years, that it is more economically responsible than the Coalition should immediately abandon economically responsible policies in one critical area:

But on other indicators Labor is found wanting. Almost 70 per cent, for example, feel Mr Rudd "should have done more" in his first Budget to alleviate cost of living pressures. And if increasing mortgage repayments, rents and groceries are biting hard into household budgets, the soaring cost of petrol must surely hurt the most.

Startlingly for Labor, three out of four Queenslanders are dissatisfied with the way Mr Rudd has handled petrol prices. More worrying for the Prime Minister will be the finding that two out of three Queenslanders support Opposition Leader Brendan Nelson's plan to reduce petrol prices by cutting fuel excise. …

As the editorial noted, Labor had dismissed the proposal as economically irresponsible. The editorial made no attempt to prove otherwise, but, nevertheless, proceeded to argue that Labor should adopt Nelson's proposals all the same.

Why?

Whilst it conceded that “Most Queenslanders don't blame Labor for rising fuel costs.“ it nevertheless maintained that Labor needed to be seen to be doing something, no matter how futile or counterproductive in the longer term. Here are its words:

… all Australians nonetheless expect their newly-elected government to do something tangible about inflation that sees real prices coming down, especially in - if nothing else - petrol.

Australians might also wonder what happened to the human sensitivity that Labor demonstrated last year in opposition. When Mr Rudd talked passionately during the campaign about the cost of petrol, housing and food, voters listened intently, with many switching their support to Labor on this message alone. But in the past six months the Prime Minister appears to have blunted his finely-attuned antennae. And, semantics aside as to what Mr Rudd actually promised on food and fuel, Australians now expect the Prime Minister to act decisively on bread-and-butter issues.

So the Courier Mail is apparently demanding of Rudd that he “act decisively” even though such ‘decisive’ action could well deny the Government millions in necessary revenue whilst having almost no significant effect in comparison to the price rises caused by the increasing scarcity of petroleum.

The editorial concludes:

… while a deteriorating economy is in itself unlikely to prise Labor from office after a single term, Mr Rudd should know he will be punished if voters believe that he failed to act on the cost of living when he at least had the chance.

The audacity in this is breathtaking. The editorial writer knows full well that it is within the power of his/her own newspaper to make the Queensland public understand why such band-aid measures as proposed by Brendan Nelson would be harmful to its interests. If the Courier Mail was truly serving the public interest, it would do its utmost to ensure that a Government that acted economically responsibly would not be punished by the public for having done so.

#LetterToEditor" id="LetterToEditor">Appendix: Letter to Editor concerning Coalition's proposal to lower fuel excise

25 May 08

Title: Coalition never governs again ?!?

MP Hockey proclaims: "Petrol will always be cheaper under the Coalition than it will be under the Labor Party."

Obviously, Hockey never expects the Coalition to lead Government again, with oil prices predicted to rise, and competition for existing oil supplies to increase substantially.

The Opposition would have to eliminate completely the 38-cent fuel excise tax once petrol hits AU$2.00/L for petrol to approximate its current price. Dropping GST entirely on petrol would save three times the five-cent fuel excise tax reduction. But the Opposition couldn't advocate that, as the Opposition gave us the GST in the first place!

What is Hockey smoking??? I hope he shares it with the rest of us "average Australians"!

Judy Bamberger,
O'Connor ACT

+61-2-6247-6220 (work and fax)
bamberg[AT]eaglet.rain.com

Posted by Sheila Newman on behalf of Mark O'Connor.

Tonight’s Insight program on SBS (June 17, 2008) –“Is Australia running out of workers” was very interesting about how we are now digging up and shipping out our minerals so fast, and so profitably, that other employers can’t compete with the wages paid by the mining companies. Employers are desperate for staff, but with unemployment currently low they can’t get workers at the wages, or the wages and conditions, they are able or willing to pay. (The most genuine case seemed to be the orchardist who had to leave several thousand dollars worth of mandarins unpicked because she couldn’t find pickers anywhere. Other employers seemed to be on the usual lurk of wanting the government to give them cheap workers.)

We are now so greedy that we want to ship abroad our mineral patrimony even faster than our existing workforce, with all the mechanical aids and vast machines now available, ­can manage. So the solution proposed by short-sighted business councils and some economists is to bring in ever more people to make up the shortfall in labor.

The result is of course that the extra workers will rapidly swell the population of Australia, so that the average Australian will own a steadily decreasing share of our mineral riches, which are themselves steadily decreasing. The future will be one of an unsustainable population in an impoverished continent –in a world beset by fuel shortages, climate change, and famines. And all for the short-term benefit of mining companies and those whose fortunes depend on a rising stock market.

Of course Jenny Brockie and her staff didn’t manage to see it in those terms. They took the reckless sell-off of our once-only mineral assets as a datum. Hence they also took as a given that there would not be enough workers in the country to service both the mining industry and the other more localized industries on which we depend for all sorts of supplies and services. And they also took as given that the mining industry would be able to pay rates other employers could not.

Granted all those unquestioned assumptions, they proceeded to examine quite rationally whether 457 visas (which it seems allow employers to pay about $10,000 on average less than they would have to pay Australian workers) were the best solution, or whether we should take in even more people as permanent migrants, or on the contrary run a guest worker system for Pacific migrants, or whether we needed to better train and motivate our own youth. The dishonesties and special pleading of employer organistions were fairly well exposed, and the CFMEU’s argument about it being no kindness to poor countries to take their skilled workers and doctors and nurses was respectfully examined.

But the underlying cause of the labor shortage, and the wisdom of selling off all your mineral assets as fast as possible, was not discussed.

Mark O'Connor

See also : Transcript of Insight program of 17 Jun 08 Labour Pains

"The unprecedented fuel prices we are facing at the moment is adding unimaginable hardship to many in the transport industry, add the new Registration charges, fuel excise increases and driving hours regulation which now come with unreasonable fines and demerit points and compliance regulations, it’s not hard to believe that we are heading in one direction…….Bankruptcy"
Industry spokesperson and Southern Cross Party spokesman, Mick Pattel, 4 December 2008

European truck drivers and farmers and fishermen have been demonstrating for weeks in the face of high oil prices. Now, finally, Australian truck owners are taking action. And it looks like there is a new political party supporting them, The Southern Cross Party.

At a meeting in Toowomba on Saturday, owners and drivers from three states said that they could not remain in business because of administrative costs related to increases in fuel excise and vehicle registration.

This supply interruption has been a long time coming, as perusal of Industry spokesman, Mick Pattel's blog will attest.

"If the government doesn't come to the party, deliveries of bread, fuel and milk will be affected," say spokespersons, Sheridan Steinohrt and Mick Pattel

They also complained about new rules for managing driver fatigue, anticipating problems with demerit points, and describing pettiness over log book infractions and excessive driving times. The truck owners and drivers are down on the National Transport Commission, the national governing body, which they say does not contain representatives from the industry.

Owners claim that they can no longer recruit drivers because of all the rules.

Mr Pattel was reported by the Toowoomba Chronicle to have stated that he thought the action might go on for two weeks, but he thought that the government might come to the table just before the truck owners take action.

According to Fairfax-owned paper, the North Queensland Register, on 29-5-2008, in Reg Burton, "National Truck stoppage go ahead", Mr Pattel had quoted said a spokesperson for Federal Transport Minister, Anthony Albanese, as saying that "he didn’t know why the operators were worried as all they had to do was pass the cost on to the public."

The truck owners hope that the public will understand their plight and support them. Mr Pattel said that the industry was warning the public so they can prepare for an interruption to supplies.

The Toowoomba Chronicle reported that the intuitive Bob Katter, Federal Member for Kennedy, was supportive to the industry, agreeing that they "have no alternative but to take direct action." The Chronicle reported that Vaughan Johnson, Member for Gregory, and Ray Hopper, Member for the Darling Downs, were also present at the Toowoomba Meeting.

The Chronicle, however, made no mention of the surely cogent fact that Mr Pattel is a spokesman for the Southern Cross [political] Party. The Chronicle is owned by APN News & Media Ltd. We have, unfortunately, come to expect this kind of omission from the mainstream press.

("All but seven of the 36 regional daily newspapers in Australia are owned by just four companies: News Corporation, John Fairfax Holdings, Rural Press and APM News and Media. And all but four of the 39 non-metropolitan commercial television stations in Australia are owned by just three operators: Prime Television, WIN, and Southern Cross Broadcasting. And it's clear if media ownership regulations are further relaxed, greater concentration is certain." - Dianne Jones from the University of Queensland, in a program about changes to media cross ownership rules, which featured Toowoomba, on 5 October 2006, at http://www.abc.net.au/rn/mediareport/stories/2006/1754395.htm)

According to their website, the Southern Cross Party is against the traditional party structure per se; it is for independents. It aims to be a party of independents. It voices reasonable and valid concerns about lack of democracy and about corporatised government affecting the access to and use of land. It is suspicious of climate change agreements and the weakening of local democracy by the distancing of political control and the abstraction of issues.

This list of demands was passed by a meeting of truck owners in Townsville on the 24th of May 2008, the additions 16,17, were added at Toowoomba Meeting 14th June 2008. (Information from: http://southerncrossparty.com/blog/2/feed)

"Not Negotiable

1. Disbanding of the National Transport Commission immediately.

2. No electronic recording systems, or work dairies.

3. No changes in the present log book format.

4. No demerit points on log books, or driving hours regulations.

The full list, available at http://southerncrossparty.com/node/783 is

Road Transport Shutdown 2008 List of Demands
Sun, 05/11/2008 - 17:39 — Mick Pattel

This list of demands have been passed by the meeting in Townsville on the 24th of May 2008, the additions 16,17, were added at Toowoomba Meeting 14th June 2008
Not Negotiable

1. Disbanding of the National Transport Commission immediately.
2. No electronic recording systems, or work dairies.
3. No changes in the present log book format.
4. No demerit points on log books, or driving hours regulations.
5. Recoupment of demerit points for professional drivers who earn their living from their licence to be reduced to 12 months not the existing 36 months.
6. No penalty to drivers exceeding prescribed driving time when attempting to reach a vacant heavy vehicle rest area or when marginally over driving hours in compliance with defacto hours proposed under the new NTC ruling for all drivers irrespective of participation of fatigue management programs, and in any case ‘reasonable defence’ is to apply where compliance is not possible.
7. All fines for logbook breaches to be capped at an agreed fixed amount and relate to safety breaches only.
8. All fines and loss of demerit points for logbook breaches to be rescinded, fines and points to be reimbursed, all licences lost as a result of this legislation to be reinstated to previous status.
9. No increases or changes in registration charges for any truck or bus over 4 tonnes, charges to be set in concrete at current levels.
10. No increase or indexation of fuel excise.
11. No fuel based carbon charges or taxes.
12. No changes or variations to the Federal Fuel Energy Grants Scheme or to the State Bulk End User Rebates both of these are to remain in place indefinitely.
13. Authorities to endorse a driver intercept report sheet to create a reporting system to identify rude and unethical enforcement officers.
14. Main Roads Authorities in all States to construct and maintain all weather road train termination pads of adequate size.
15. A priority funded program to provide all weather heavy vehicle rest areas that are designed to provide adequate parking and amenities for the different truck trailer configurations according to truck traffic density.
16. That the log book period be changed from any 24 hour period to midnight to midnight on any calendar day.
17. That an inspection by an officer of either Queensland Transport or the Queensland Police Service of a drivers log book cannot be inspected past 14 days prior to the interception date.

5. Recoupment of demerit points for professional drivers who earn their living from their licence to be reduced to 12 months not the existing 36 months."

Toll-road operator, ConnectEast, has only one asset, a 39km motorway running from Mitcham to Frankston, at the cost of $3.5billion. In "A testing time for ConnectEast," The Australian Financial Review on 12 June 2008 reports that ConnectEast's shares are at their lowest value ever, just as it is about to open the toll-way, five months early. AFR Journalist, Chanticleer, thinks this is part of the 'thrashing' handed out to the 'debt-laden infrastructure sector in general'.

This is yet another private-public pet State Government project. The Victorian State Government's bias for new roads is looking sillier and sillier in the light of peak-oil, yet it continues to ram these costly anachronisms through against all kinds of public protests.

We reported on this toll-way in "Roads to Wildlife Extinction", where a proposed route for a bypass threatens to cut through a major flora and fauna reserve and to bisect the Mornington Peninsula, ruining plans for wildlife corridors in the area.

Transurban, is also sinking fast on the share-market. This is the company behind the unpopular tunnels in the Victorian EastWest link, which includes an 18km road tunnel linking the Tullamarine and Eastern Freeways and a 17km rail tunnel linking Footscray to Caulfield. These enormous automobile-intensive and invasive works have sparked massive protests, despite the fact that the Prime Minister, Kevin Rudd, just 'kicked in' $12 million to help

Rudd's contribution comes under what everyone in the government and the mainstream press is referring to as
"nation building'. This quaint term is creepily colonial and one wonders why our leaders have accepted to mouth such clunky terminology, then one remembers that they are clunky leaders.

Anthropologist John Posthill has devoted an entire book to the term, and here is an apt quote for what's going down in Australia:

"The notion of nation building is no less problematic than that of nation. This term has long been marginalized from serious Western social theory for its association with modernization theory (Smith 2004:195, cf.Deutsch and Foltz 1963, Deutsch 1966). The latter had its heyday in the 1950s and 1960s as the U.S. government recruited scores of social scientists in its efforts to win the ‘hearts and minds’ of Third World populations in rivalry with the Soviet Union and China. Modernisation became an elastic notion used by U.S. academics and policy-makers to explain the persistence of traditional ‘mind-sets’ and ease the transition to market-driven, ‘democratic’ regimes in the post-colonial world. In other words, it was used to promote a form of nation building modeled on an idealized United States (Latham and Gaddis 2000). In Vietnam, ‘the other war’, the propaganda war over hearts and minds, was fought and lost by American social scientists who failed to agree on a nation building strategy for that country (Marquis 2000). At present, the term is often used in the Anglophone media and popular scholarship with reference to America’s half-hearted attempts at ‘reconstruction’ in occupied countries such as Afghanistan or Iraq (e.g., Ignatieff 2003)."
Source: John Postill, Media and Nation Building: How the Iban Became Malaysian, Berghahn Books, 2005

In a Submission to the Select Committee of the Legislative Council on the Impact of Peak Oil on South Australia
Summary, the South Australian Farmers Federation has stated that, and I quote, "The rise in 'Peak Oil prices' has had a significant affect on the farmers and rural communities in this state."
They explain that the effects have been experienced as:
"• Higher costs of farming and using machinery
• Higher costs of farm inputs as a result of petroleum products used in their production, for instance fertilizers
• Higher freight costs
• Supermarket Duopoly forcing farm gate prices down
• Higher transport costs affecting rural families for basic social activities for sport and relaxation
• Drop in volunteer labour due to travel costs

In their executive summary they state:
"Unless something is done quickly to address this situation there is a danger of farmers leaving the land and food production dropping. Recently the UN stated that lower production in developed countries and rising demand for food could cause serious global problems due to food shortages.
It seems incongruous to the SAFF that given the world wide situation that our farmers are finding it so hard to make even a reasonable living, when market forces should be driving the price they receive for produce up, not holding it down at a level below the increase in costs.
The South Australian and Australian markets need to be reviewed as a matter of urgency to ensure that fair market forces are allowed to operate in the state so that producers can earn a fair return for their effort and ensure their future viability."

The submission-writers recommend "that the South Australian Government:

• Review the fuel excise system with a view to reducing the excise levied on fuel
• Invest in research into viable alternative fuel sources.
• Create a system that ensures the supply of fuel to the state in general and to farmers in particular at crucial harvest / sale times
• Review the current system of moving freight, looking for an innovative new approach that can benefit all industries in the state
• Undertake a program to improve the ability of rural people to travel to basic family activities such as sport and recreation as well as other necessary travel
• Ensure the elderly in rural areas are supported to reduce the cost of travel to essential appointments
• Volunteers are supported."

Full submission is available here.

India: Oil prices to increase by 11%
Diezel goes up by 9%
Cooking gas goes up by 17%

The Indian Government is reported to fear that the price of oil may cost it the next election_#main-fn1">1.

Such are the politics of petroleum. There is nothing it does not touch.

The 'rich countries' appear to have much more of a buffer than most of India, but their road transport and agriculture industries are already in trouble. It is well-known that starvation is never far away for many people in the tropical Asian countries, but less well-known is the large class of people living in precarity elsewhere, especially in the Anglophone countries.

In London around 10,000 finance workers have lost their jobs this year and it is anticipated that perhaps up to 40,000 will lose their jobs in the current months. (France2 8pm News, 21 May).

In "Job loss a sure road to skid row"_#main-fn2">2 in the Herald Sun of Tuesday May 27, 2008, it was reported that a Citibank survey showed that, in Australia, "one in two workers would face financial ruin within four weeks of losing their jobs;… almost 20 per cent of workers would not last a week. Only one in four workers would be able to survive more than three months."

Some 'rich countries' don't know when to stop and part of their population is sliding ever so quickly into third world status. For instance, the Australian government has become a 'banana republic' massively endebted and engaged in energy-intensive infrastructure expansion programs everywhere. Under the behest of the Australian academy of Technology and Engineering Sciences, the Property Council of Australia, The Australian Population Institute, and its own state governments, all heavily peopled by big development lobbyists, Australia is trying to double its population as soon as possible, planning new megacities. For these 'programs' of infrastructure building and population increase, worker, business and family reunion immigration have been stepped up, and families receive baby bonuses for having children, just as though the days of cheap oil were just beginning, instead of in their twilight. Yet, as in the USA, evictions and personal debt are sky rocketing.

And really, what is three months security in a century of oil depletion? Who is safe? We all need more solidarity. France, so far, shows the best example.

Sheila Newman

Footnotes

#main-fn1" id="main-fn1">1. #main-fn1-txt">↑ Rhys Blakely, "India concedes in battle to keep oil price down", The Times, 6 Jun 08

#main-fn2" id="main-fn2">2. #main-fn2-txt">↑ Craig Binnie, "Job loss a sure road to skid row" in the Victorian Herald Sun(Australia) of 27 May 08

One hundred years ago today (as I write this in late May), sulfur fumes permeated the air at Masjid-i-Suleiman. A good sign indeed for an experienced oil hand like Reynolds. At 4 am, the drill reached 360 metres under the desert sand, and struck oil. A gusher, 25 metres high, shot into the air. Arabian oil was born.

The site was so remote that it took five days before D'Arcy got word by telegram in England. "If this is true," he replied, "all our troubles are over." It was indeed true, and more rigs hit oil elsewhere in Persia, including another huge one in September.

How things have changed. Whatever happened to telegrams? Whatever happened to the oil?

The 20th Century will undoubtedly be remembered for the explosion of technology, steam, then oil, then nuclear and solar powered technology. I stress, powered technology. Most people confuse technology with energy, and unfortunately, they are not interchangable, something fast becoming obvious as we approach the 21st Century era of Peak Energy and limits to growth.

There is so much nonsense in the media today about the reasons why petrol (and diesel of course) is so expensive, it's mind boggling. Surfing the media's web blogs' tailing articles on petrol prices quickly exposes the man in the street's ignorance of the truth. Not that we can point the finger at 'people', the media (outside of publications like this one) is doing very little to educate or inform their readers or viewers.

So, when I prophesise that within as little as four or five years we may not be able to buy any fuel at all, at any price, people of course think I'm a complete nut case. I can understand this. The government is hardly showing signs of any such concerns, when they propose to build new freeways and tunnels to the airport!

Peak Oil is often misconstrued as 'running out' of oil. In fact, it's 'only' the point at which roughly half the oil has been extracted. This has been thoroughly documented in the USA which was by far the largest oil producer until after WWII. That nation peaked in 1971, and even though the largest oil field in all of North America (Prudhoe Bay) was put into service shortly thereafter, the US' oil production never recovered, inexorably decreasing to its current level, slightly less than 50% of peak. Peak Oil is no theory, the American experience proves this beyond any doubt.

So what of Australia? The news, I'm afraid, is grim indeed. Australia's oil production peaked in 2000. The Australian Bureau of Agricultural and Resource Economics (ABARE) has, for reasons known only unto itself, consistently mispredicted our future oil production. This is most baffling. Just who are they trying to kid? Do they pick figures out of thin air? Senator Milne and Ian Dunlop, formerly an international oil, gas and coal industry executive, now also challenge our resources peak body for misleading everyone, not just once, but at least five years running. This, in my opinion at least, borders on criminal negligence. One has to realise that very important decisions are made on the back of these predictions, like enlarging airport runways.

When a nation's oil production peaks, it must then rely on importing from somewhere else. The US imports oil from Canada, Mexico (now collapsing), and Venezuela, with some top up from the Saudis and Africa. We in Australia, you may be surprised to find out, import oil from Vietnam, PNG, the United Arab Emirate, Malaysia, Brunei, and, as a further surprise, New Zealand. We actually get more oil from NZ than we do from Saudi Arabia. http://anz.theoildrum.com/node/3657

There is a problem with importing oil from less developed nations. They want what we have, and are developing at an accelerating pace. Since Vietnam is our biggest single supplier (currently 28% of all imports), let's analyse their situation.

Vietnam's oil production, which did not start until 1986, steadily rose to a peak of just over 400,000 barrels/day in 2004. It has been in decline ever since. Its domestic oil consumption, also rose very quickly and in unison to 275,000 barrels/day (in 2006) as that country's economy grew at a mighty 7.1% annually, a doubling of GDP (and by definition, consumption) every ten years. By now, production is probably down to 300,000 barrels/day, and consumption is up to about........ 300,000 barrels/day!

Data for the above from http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=VM

So where's our oil going to come from now? And how dare they use it all up! Vietnam's nett oil export is now in virtual freefall from 175,000 barrels to 90,000 barrels/day in a matter of just five years. At the time of writing (I do not have current figures) it might be possible that like Indonesia (which has just left OPEC - remember, OPEC is for Oil Exporting Countries!) Vietnam has become a nett oil importer, just like us. Martin Ferguson worries about a deepening trade deficit of some 25 billion dollars from importing oil, but I worry about there being none at all left to buy.

There is not the room here to analyse what is happening to the other nations we import from, but I can tell you that apart from the UAE (representing just 12.5% of our imports), the picture is similar everywhere, including Saudi Arabia. Oil exporting nations are falling like dominoes, and soon there will be none to turn to. Within five years from now, unless another Bass Straight is found, Australia will be left with a mere 10% of the oil we now take for granted, and it might in fact be less.

Now we might find another Bass Straight, but you have to understand that even if another 250,000 barrels/day of Australian oil comes on line over the next five years, we would still only have about one third of what we currently take for granted.

This is not the time to build new freeways and tunnels to airports (which may even be quasi abandoned within five years as airlines all over the world go belly up), what we need is a major effort to build new rail infrastructure, and other associated public transport. I see no other option but to start rationing fuel, and fairly soon, allowing essential services like farming, medicine, fire brigade and so on to continue operating. Time is short, we must act now. We need visionary leadership.

Suggested reading:
http://anz.theoildrum.com/node/3657
http://www.futurescenarios.org/
http://www.peakoil.org.au
http://groups.yahoo.com/group/roeoz/
http://permaculturenoosa.com.au/
http://austlii.law.uts.edu.au/au/legis/cth/bill_em/lfeab2007303/memo_0.html

Mike Stasse is a Sustainable Housing and Energy Efficiency consultant and an accredited BERS energy rating technician. He lives with his wife in the Noosa hinterland at Cooran in their Award Winning eco solar house.

This article is based on highlights from a lecture by George Soros, at the London School of Economics to launch his new book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means (PublicAffairs, May 2008). Early in this lecture, Soros situated the beginning of current problems down to deregulation as practised by Thatcher and Reagan from 1980. He gave four reasons why he believed the US economy (and the world economy as it is impacted) will go into recession: 1. The decline in housing prices is still accelerating and is going to overshoot on the downside the same way as it overshot on the upside. We are not yet half way in the decline in housing prices. We will have at least 12 more months of increasing foreclosures and so on. 2. The consumers who have been relying on the double digit rise in housing prices for their ‘piggy-bank’ have withdrawn equity from their mortgages at a rate in excess of the current account deficit. This peaked at around between 8-900 billion USD in 2006. Now the outlook has changed and they are facing declining housing prices where at least 15% of regular mortgage-holders will be 'underwater' in their mortgages. Savings will therefore have to increase. The American consumer will cease to be the motor of the world economy which they were for the last 25 years. 3. The banking system is severely impacted, despite its 'quite impressive ability to raise capital'. The willingness of banks to lend to finance business is also going to impact capital and spending etc. 4. The situation now carries simultaneously the threat of inflation and recession. This is partly because the dollar has ceased to be the unquestioned accepted reserve currency, which up until recently allowed the American consumer to become the economic motor of the world and permitted the US to consume over 6% more than it produced. When asked if 'we' [the world] are heading for recession, Soros said, “Yes”. Asked about Europe, it was obvious that Soros saw the European economy as different from that of the US. He anticipated, for instance, problems for Spain, but not for Germany, because Spain has had a housing bubble but Germany has not. He expressed the opinion that these kinds of different outcomes will give rise to 'serious tensions' in the EU, because up until now the EU has been characterised by convergence rather than divergence'. Now there will be divergence. Also, the ECB (European Central Bank) has an 'asymmetric directive'. Its job is 'to prevent inflation, not to maintain growth'. As a result it is keeping interest rates steady rather than reducing them. That and, most importantly, the exchange rate, because lowering interest rates quite radically has led to a decline in the value of the dollar and that 'decline in the dollar has effectively exported the recession to Europe'. But 'the UK and the US will probably be more affected'. On the possibility that hope of continued growth might lie in the developing world "decoupling" from developed world: Might it be true to say that if the US consumer stops dragging the world along, the world will still be dragged along by China and India whose growth will mitigate the recession?. “There is a very substantial difference between the developing and the developed world which has positive and negative aspects. It may lead to avoiding a world wide recession but on the other hand it could be responsible for inflationary pressures which can make problems bigger for the developing world. There is a difference but there is no decoupling. We are Siamese twins tied together." Soros said that there is a "Need to improve the quality of regulation. It is not enough to regulate the money supply; you also have to regulate credit. This is because credit conditions do not always correspond to the money supply. Markets tend towards extremes of optimism and panic. Therefore you have to have minimum reserve requirements and optimum reserve requirements. They need to be made variable. That is the way to prevent asset bubbles from developing. Greenspan is right to say it is difficult to identify a bubble and to know when to interfere. It may be difficult but you cannot escape the duty. Keeping the economy on an even keel is an art, not a science. Regulators have to accept this additional duty … It is not enough to bail the system out when it collapses." Markets can behave faster and regulators are slower and more bureaucratic; you need both. Soros stated that he thinks that "market fundamentalism is a very convenient belief for the 'haves' because it justifies their having it. In other words, they prosper (that includes me, [he added] by the way, among the haves but I don't share this view on market fundamentalism). It's a wonderful excuse for pursuing your self-interest to the detriment of the common interest because there is a theory which says says that the common interest is best served by everyone pursuing their own interests. So its a very convenient belief and that is why it has such great currency and that's why you find that it is generally people with lots of money who are supporting and propagating this belief. There is a connection. The impact of the price of oil at $130 on US inflation... "I have given this a lot of thought because it is really quite disturbing, the price of oil. And I would say that there are four factors involved. One, the increasing difficulty and cost of finding and extracting oil. People talk about "Peak Oil, but that is a misnomer for increasingly expensive oil. So that is number one. "Secondly because of the decline of the dollar you now have a backward- sloping supply curve, that is to say, the more the price goes up the less incentive the oil-rich countries have to convert their oil reserves underground, which appreciate in value, into dollar reserves above ground, which depreciate in value so you have a backwards sloping supply curve. There are also other factors involved, namely that many of the oil reserve countries are in the hands of desperates who mismanage the economy ... Iran or Venezuela and so on... You know it's easy to be a Bolivarian revolutionary when you have oil at over $100. That's the second factor. "Thirdly the main areas of demand growth are in China and in the oil producing regions of the Gulf and Russia. And in those countries the price of oil is subsidised and therefore the rising prices don't have an effect on demand. In the US, yes. But in those countries and that's where the real growth is... the price does not influence demand. "And fourthly there is a trend following speculation and it is now having a major effect on the price of oil and you see that in the rise of far out delivery ... the real big move has not been in the cash price of oil but in the futures price several years out. And that does affect the cash price as well ... so there is now a bubble aspect also. So those four factors are responsible for the rise in oil. Again there is this sort of Greek tragedy aspect of it. Yes, if you have a serious recession in the developed world, it means that demand does go down and the the price will be affected, but first you have to have the recession for that to happen, and the rise in the price of oil actually hastens the outset of the recession and that is part of my argument why this crisis is different from the previous ones." You can download the entire lecture from the London School of Economics site at www.lse.ac.uk/resources/podcasts/publicLecturesAndEvents.htm.

"Jeunes agriculteurs" (Young Farmers) are demanding tax free petrol for agriculture and for the government to control distribution of petroleum in France.

Other Jeunes agriculteurs blockaded the petroleum depot in Frontignan, France, where about 100 farmers engaged with 50 riot police (la Compagnie républicaine de sécurité, CRS). One member of the CRS and one young farmer were injured. The blockaders had barricaded the road leading to the depot with burning tyres, palates and plastic rubbish. The farmers came from all over the Languedoc-Roussillon region and were responding to calls from the Regional Centre of Young Farmers (Centre regional des jeunes agriculteurs - CRJA)

"Fishermen, farmers, it's the same battle", said Xavier Fabre, Vice-President of the Launguedoc-Roussillon region of the CRJA. "We also use gasoline. One year ago we were paying 40 to 50 centimes a litre and today we pay one euro the litre. [That's about $2.00 Australian or US] It is costing us 50 euros a day to run a tractor.

(Fishermen protesting oil prices continue to be active in France. On Wednesday they were giving out pamphlets in Sète, France, to educate people about their problems. And fishermen from Grau-du-Roi in Gard caused traffic jams for 11 km on the A9 freeway near Monpellier.)

In Toulouse a large group of Young Farmers successfully blocked deliveries to and from the local petroleum depot. They have said that they will continue their blockade until tomorrow and that if the government fails to accede to their demands, they will go further in their actions.

The rise in petroleum prices, for farmers, also entails the costs of fertiliser, which is made mostly from petroleum gas.
In France, to fertilise 100,000 ha the costs have risen by 15,000 euros (approx 30,000AUD/USD).

In Britanny on the road to Bordeaux, there was an operation escargot - (operation snail), i.e. a slow drive to make the point about hardship and petroleum prices, with truckies joining farmers in a convoy of slowly driving vehicles, blowing their horns.

In Bulgaria there were similar protests. In Taiwan queues formed on the roads to gas stations after the government announced that the prices were going up. Thousands of drivers queued up all night to fill their tanks.

Without the cheap fertiliser that comes from plentiful petroleum, most of the enormous gains in production made in the last 50 years, which have permitted human economies to support enormous populations, will disappear. We can see signs of this whole economic structure fraying in the food riots in poor countries, the profiteering over state-subsidised 'biofuel' production in the US (fatal for soils, which are everyone's greatest wealth), the organised protests in France, and, most arcanely, the ridiculous and pathetic arguments over minor tax relief at the bowser in Australia. Question to all: Does Australia have even stupider politicians than the USA?

Sheila Newman

Sources: France2 Infos, 20hs, 28-5-08 and Romandie News, "Dépôt pétrolier de Frontignan: les CRS délogent agriculteurs et pêcheurs"

French State subsidizes French fishing fleet oil in harsh context of oil prices of $134US on 21-5-08

Industrialised fishing is not only no longer sustainable due to falling fish-stocks but now falling energy supply has priced it out of the free market.

This is a real loaves and fishes crisis. Where is a miracle when you need it?

The French and most Europeans realize that they must prepare their industries to sustain a self-sufficient Europe.
After days of strikes with roads to petrol stations barricaded so that bowsers could not be replenished, the minister in charge of the French fishing industry received permission from the EU to accede to some of their demands. 40 m euros will go to assist the industry to deal with higher petroleum prices. 22 m of that will go to cod fishermen who have been temporarily unable to work due to having exceeded their quotas.

The French Primeminister, Francois Fillon, said yesterday that marine fishing is the only profession in France where the cost of petrol is deducted from the crew’s wages. It is now costing more to fish than fishermen earn. Marine fishing is also the most dangerous profession in France, with the greatest numbers of accidents and fatalities. He stated that these factors meant that the industry is not comparable to the trucking industry, when asked if similar subsidies would be accorded to road transport.

French fishermen complain that the price of imported fish is too low to compete with. The French fishing catch has fallen by 60% whilst the French consume 40% more fish. One in nine fish consumed comes from aquaculture.

The French fishing fleet has been rationalized by law and through attrition from 43,000 to 17,000 over the past few years as the fish-stock falls and the EU tries to come to grips with ecological limits. There have been battles for fishing territory between French fishermen and other European fishermen, notably the Spanish, who, in 1994 boarded a French fishing boat, “La Gabrielle”, and surrounded it with 300 Spanish tuna-fishing vessels for seven days whilst negotiations proceeded at an international level to free the French boat.

The French fishing fleet is made up mostly of trawlers. Since the 1970s, line fishing was replaced by huge metal nets. Trawlers drag these heavy nets back and forth across the sea all day long. According to the Regional economic observatory in Britanny, petroleum made up 20% of costs for a trawler 16-20 meters long in 2006, compared with 10% for a lobster pot-boat of 12-20 meters and around 6% for a line-boat of 12-24 meters. ( Source :Laetitia Clavreul, « La crise du gazole révèle les failles de la pêche française, », Le Monde, Paris, )
The possibility, so cherished by growthism-economists, of increasing productivity to solve all resource problems, comes head on up against the reality of declining fish stocks and declining oil production in this case. Aquaculture is not a simple solution because it also relies heavily on fossil fuel to feed its fish, is highly polluting and disturbing to ecosystems, and cannot compete with the variety supplied by nature. There is currently research into using organic waste, including human waste, to feed aquacultures, but doing this safely on an industrial scale is problematic like so many processes which work on a small scale.