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2011: year of the next mega-shock

Written By: - Date published: 8:40 am, December 20th, 2010 - 47 comments
Categories: Economy, energy, food, sustainability - Tags: ,

Liam Dann had a very good piece in the Herald the other day about rising commodity prices. Despite insipid growth, prices of food and oil, the fuels of our civilisation are through the roof. The underlying meaning of those high prices is we’re having to devote more of our resources to feeding and fueling ourselves, leaving less for anything else.

“Given the world is only firing on one hemisphere right now the strength of commodity markets is staggering and just a bit terrifying.”

Unfortunately, most policymakers and economists seem more staggered than terrified. The neoclassical economic model doesn’t understand that there are limits to growth, so they have no explanation for why prices are rising. Their tendency is to dismiss we’re seeing an aberration, another speculative bubble, not a situation where supply has reached its limits and unsatisfied is forcing prices up.

Dann shows that a slew of commodities are giving the same message. There’s not enough to go around. There are too many mouths and not enough bread:

“Take rubber, which can seem pretty obscure to us – as a tradeable commodity at least.

India – the fourth biggest producer – looks set to drop the import tariffs on rubber imports next year because it can’t met domestic demand for car tyres.

Prices for raw rubber are at record highs after rain interrupted the season for collecting the stuff (from trees).

As we’ve seen with oil, and as Dann mentions with rice below, relatively small supply disruptions are causing huge price increases. This is all a function of a system strained to capacity. There is no spare productive capacity anywhere to be found for rubber, rice, oil, or many other commodities, so it only takes a small event to create a short-fall, which is ‘solved’ by a price spike that destroys demand.

There are also fresh stats about gold out of China this week. It is no secret that it is a hot commodity at US$1390 per ounce, up 27 per cent in the past year.

The latest stats show China imported five times as much gold in the first 10 months of 2010 as it did in all of 2009. That’s about 209 tonnes, which is a lot when you consider that domestically China is the world’s largest producer of gold.

Analysts were surprised by the size of the leap and pinned it on high inflation prompting investors to hold. Cotton was probably considered a sunset industry in the 1970s when polyester suits were all the rage. But it is another old-world product making a big comeback. Prices have surged 67 per cent in 2010.

US exporters say they can’t get it out of the country fast enough and of course the demand is all out of China where textile factories are still expanding.

One of the scariest commodity stories this week was, somewhat predictably, about oil.

As pump prices in New Zealand creep back towards $2 a litre a report from independent oil economist Mamdouh G. Salameh this week predicted that this year’s projected supply shortfall of almost 5 million barrels is likely to widen to 9.2 million by 2015.

That’ll mean new record highs – topping the last peak in July 2008. But, Salameh says, the gap between supply and demand is likely to be too big to reconcile with even higher prices.

His best-case scenario is shortages curtailing economic growth. His worst-case scenario is conflict and potentially war.

It’s not a coincidence that all the commodities are displaying the features of peak production at the same time: on top of their own constraints, they’re all powered by oil.

It doesn’t get any better when you look at food commodities. Rice, which Bloomberg casually describes as “the staple food of more than three billion people”, is tipped to triple in price over the next 18 months after flooding in key production regions like Thailand restricted supply.

That would take it back above levels last seen during the 2008 spike in food prices.

In 2008 food commodities prices blew out to scary levels because Eastern and Western economies were growing at unprecedented rates.

That crisis, which had people protesting in the streets of Europe and Asia, is easily forgotten. It was overshadowed and resolved – in the short term at least – by collapse in demand in the West after the financial meltdown.”

It still blows my mind that few economists see the link between those events. We experienced the largest food and oil price spikes in history in late 2007 to mid 2008 and that was followed immediately by a global financial crash precipitated by Americans with high fuel-use dependent lifestyles in the exurbs who stopped being able to pay their sub-prime mortgages. In fact, most of the developed economies were in recession before the financial crisis exploded in the second half of 2008. I’m an ardent believer that it was oil going over $100 a barrel and staying there that caused recession, and the sub-prime crisis was just one of the mechanisms by which that shock was transmitted through the economy.

Fortunately, more and more analysis is waking up to the fact that the financial crisis was just the proximate cause of the Great Recession, the underlying reason was resources constraints. And they haven’t gone away.

The underlying problems were never resolved. What will happen to prices if and when US and European economies return to the kind of economic growth their populations have come to expect?

What we see bubbling just below the surface of all the news about sovereign debt are even more serious and structural problems in the global economy.

With oil predicted to top $100 a barrel again next year and other commodities (whose production is dependent on oil) also due to skyrocket. 2011 could be a repeat of 2008. Except this time the world’s economies and governments are in far weaker shape – it’ll take only the slightest push to knock over their supposed recoveries.

If this is the new normal then the question will have to become how we divide the wealth we have. The elite already has its answer: the Great Recession has seen wealth concentrated even further in the hands of the few. If we let them, they’ll pull the same stunt again and again.

47 comments on “2011: year of the next mega-shock ”

  1. Colonial Viper 1

    I am very interested in why dairy farmers etc are making good money from high commodity prices – but the rest of our wider real economy has been gaining almost nothing from it e.g. in terms of unemployment, median wages, business confidence, etc.

    Seems to me that huge amounts of capital is being made, hoarded and concentrated for the benefit of a few, peeps.

    Agree Marty – 2011 is likely to be a very bad year for the global economy and for us, especially under a continuing NAT govt. And if that holds true, the fabric of NZ society is going to be further strained.

    If English and Key are planning a late election in the hopes of an “aggressive recovery” turning up somewhere sometime, they are kidding themselves.

    • Marty G 1.1

      don’t forget a lot of dairy farmers are up to their eye-teeth in debt and barely profitable even at record prices. High prices have brought very marginal land into use for dairying. Again, this is a function of global supply constraint.

      • Colonial Viper 1.1.1

        Big mortgage repayments on farms and speculative investment properties? Yep. So it looks like our high dairy prices are benefitting whom? Wealthy Australian banking shareholders and Ozzie lifestyles.

        If you didn’t already know, dairy farmers are importing huge quantities of tapioca and palm kernel to feed our dairy herds with. They cannot grow enough grass to sustain the size of herds that they have built up. The quality of NZ milk risks tanking and taking the industry down with it.

    • ak 1.2

      … in the hopes of an “aggressive recovery” turning up…

      Akshilly, our uncannily talented trader predicted agressive recovery for 2010……guess there’s been an unexpected step-change on the tyre-kicking cycleway to the Switzerland of the South Pacific….

      (captcha: walk)

    • Bored 1.3

      Dairy farming has incredibly high energy requirements in the form of on farm inputs (irrigation pumps, milking shed machinery, electric fencing, tractors, fertiliser distribution) and massive off farm energy costs (fertiliser production, transport to and from farms, high tech industrial support base etc). When oil price spikes and electricity price spikes arrive (as they will) the farmers will require higher prices at the farm gate to survive. If you are mortgaged for say 7.5% of capital per annum and your input costs go up by a lesser percentage you are still gong to be badly squeazed. If they go over the mortgage payments its good night nurse.

      I have only mentioned energy cost causing this: lets say availability also becomes compromised (as is highly likely)…production will also be compromised. Double whammy. Or finance and capital availability, triple whammy. We and our dairy farmers are in the proverbial.

      Is it all over? Yes in the current guise. No if we return to the practices of prior generations and expect different but sustainable returns. It is the transition which is going to be painful, but the eventual outcome could be very positive from all angles.

      • Carol 1.3.1

        Dairy farming has incredibly high energy requirements in the form of on farm inputs (irrigation pumps, milking shed machinery, electric fencing, tractors, fertiliser distribution) and massive off farm energy costs (fertiliser production, transport to and from farms, high tech industrial support base etc).

        So, part of the answer should be investing less in dairy farming and more in plant food farming?

        • Bored

          Not that simple Carol. It comes down to what the soil and climate suit best, and what returns you can make. Dairy is a really good thing in the right places, the world needs dairy products as much as it needs crops. And even without the energy inputs we are still good at producing them.

          • FiresFloodsFlys-Aus

            And don’t forget the helping hand from the tax-payers etc with floods, bio-scares, palm-kernel, droughts…

            • Colonial Viper

              Imported palm kernel and tapioca. Thats right kids, that’s what your milk is increasingly made from, forget about milk from NZ pasture fed cows, thats slowly turning to history as our grass and irrigation cannot keep up with what we are demanding of it.

          • Shane

            For a lot of poorer people the main source of protein are dairy products, and it is a pretty good way of converting grass into protein – a vital part of the human diet.

            • Colonial Viper

              For a lot of poorer people the main source of protein are dairy products

              I do read reports its getting much less affordable. NZ’ers are made to pay export prices for our dairy. Cheddar at $13/kg isn’t so good for poor people.

              a pretty good way of converting grass into protein – a vital part of the human diet.

              Just guessing here that you’d get more protein from consuming 50c worth of low fat mince than from $2.40 of milk. And you’d get a more complete selection of amino acids which are “a vital part of the human diet”.

              BTW many cultures around the world have NEVER had dairy in their diets, so while protein is crucial, DAIRY is not.

        • Tobias

          Yes Carol, I think we should be investing more in farming other than dairy.
          The costs of dairy in energy, water and pollution make it a high intensity farming practice.
          There are many high yield crops that could be grown in New Zealand. There is a lot of potential for our secondary food technology industry to grow to make use of supply – we could dry, preserve, pickle or process a greater proportion of the huge volume of produce we have. There are many crops and resource which have high value that we do not produce for export yet, such as the 30-40 commercially viable varieties of mushrooms, aloe, olive leaves and teas instead of just oils, dried and processed seaweeds and seaweed products, bait fishes used as a food source instead… etc.
          Japan is a comparable geography and climate in a lot of ways to ours, and it has the highest yeilding crop production per square metre of anywhere in the world (even though it does not have the highest population density by any means). Japan only farms dairy in it’s far northern regions, for the rest of the country crops are more economic. The only reason NZ is dairy mad is that it’s good money – low labour costs, high returns. Water is cheap and poor controlled in NZ, there are few charges for run-off waste water, and milk fetches high prices than petrol most of the time. If you own your own farm, or most of it, then dairy farming is lucrative. But it’s not sustainable at the current levels of water use, pollution and petrol costs.
          If you’re a farmer who’s borrowed up to your eyeballs to convert to dairy or expand your farm, then you’re likely to go belly-up, which hopefully will help NZ to balance it’s land use more wisely.

  2. Colonial Viper 2

    In 2008 food commodities prices blew out to scary levels because Eastern and Western economies were growing at unprecedented rates.

    Part of the reason was also that the big investment banks were speculating on derivative instruments based on these underlying commodities.

    That is, in order to make a quick buck on the markets, bankers and bond traders risked speculation pricing food staples out of reach of tens of millions of people and causing wide spread starvation/societal unrest.

    • Hi CV,

      The new date for my interview with Kevin Barrett is 28th of December 6-7 a.m. The first attempt failed do to a computer crash.

      This is were it will be archived.

      • The Baron 2.1.1

        You’re interviewing Kevin Barrett, the holocaust denier? http://en.wikipedia.org/wiki/Kevin_Barrett#9.2F11_Truth

        And what has this got to do with 2011 and commodity price shocks?

        • travellerev

          Dear Baron,

          Kevin Barrett has very good relationships with many many Jews. He regularly has rabbi’s from ultra-orthodox Jewish sects to liberal free thinking Jews on his shows and is one of the people who started the Muslim, Christian, and Jews for 911 truth site.

          He seems to have regular discussions about the way Zionists used the Holocaust as a means to manipulate the West into supporting them in their guest to rob the Palestinians from their lands. In this he has found much support from Jews against Zionism for example but to my knowledge has never denied the Holocaust as such. He has pointed out however that more then 70 million people lost their lives and not just Jews. That is not the same as denying the Holocaust but I understand that for you this is an easy smear.

          I directed my comment to Colonial Viper alone who had expressed his interest in the interview.

          Feel free to fuck off and not address me.

          • travellerev

            Added to that it never ceases to amaze me how people using the Holocaust deny smear are themselves in general the greater anti-Semites in the vehemence with which they hate Palestinians and Arabs in general.

            Let me point out that all Arabs including Palestinians and Jews are Semites. The common thread being the Semite language family and that until 1948 (the year that Israel was established and the genocidal Holocaust against the Palestinians started) Jews had lived for thousands of years in peace with their Arab neighbours and that they continue to do so in countries such as Marocco, Tunesia, Egypt, Iran and Iraq to name a few. It was the Christians who perpetrated the most heinous crimes against Jews over the centuries not Arabs.

            Even now Jews can move freely in the Palestinian territories and the hatred of Palestinians is not against the Jewish religion but against the racist Zionist state of Israel and its elite rulers.

            Here is an interview with former AIPAC member Richard Forer and his experiences in the Palestinian territories 1, 2, 3 just to get a different perspective.

          • The Baron

            You realise this is a blog, right? Email still exists if you want to address CV alone.

            As for this fucking off, sounds like bullying to me. And now you’re calling me an anti-semite as well. Isn’t this exactly what you got your knickers in a knot over a couple of weeks ago?

            My oh my Eve, it appears you’re a hypocrite.

            It takes a certain degree of maturity to be able to engage rationally with people that disagree with you. I haven’t even started disagreeing and you’re already resorting to one of your shrill, melodramatic meltdowns. Grow up a little huh.

            [lprent: Email still exists if you want to address CV alone.

            Wrong. We don’t give out e-mails (see the policy) and don’t allow them to placed on site because of the problem of bots searching for such details. So your statement is total and utter bullshit. There is no avenue via this site for people to go private to each other.

            It is an issue that I’ve been thinking about for a year or two, but I can’t really see a easy solution unless I build an anonymizer mail system. ]

            • travellerev

              Your unwanted attentions and deliberate baiting is the truly bullying bit Baron and clearly meant to ridicule and shut me and other people saying things you don’t want to hear up.

              Your attempt at smearing me via Kevin with the Holocaust denial smear just backfired. If you can’t stand the fire don’t go near the kitchen and if you bring in such a nasty technique to the table you’d better be prepared to take it all the way but you need brains for that and clearly you don’t have those. Hence the shrill remark. Typical for males not able to handle an intelligent woman.

              I did not tell you to fuck off from this site as that is not my prerogative but to have to endure your sad baiting shite without apparently being able to tell you to fuck off is the unreasonable bit.

              Oh and Baron,

              Kevin Barrett will be interviewing me not the other way around.

      • Colonial Viper 2.1.2

        Thank you travellerev.

    • Bill 2.2

      “..there’s nothing natural about these speculative bubbles. They’re very much human-generated, particularly since legislation in 1991 was waived as the result of lobbying by Goldman Sachs. (…) And a few people profit a great deal. In 2006, for example, Merrill Lynch estimated that speculation was causing commodity prices to rise 50 percent higher than if they were based on just supply and demand alone.

      …if the way that we distribute food is through the market, then the main barrier to access isn’t the quantity of food that’s available, but the poverty of the people who are unable to access it. (…) so that now the number of hungry people in the world, according to the last count in 2009, was estimated at 1.06 billion people who are hungry. So, in fact, things, for many people, are much worse than they were in 2008, not necessarily because harvests are lower, but because people are poorer.

      …the natural sort of shocks that we are seeing more and more of because of anthropogenic climate change, (are) layering on top of human systems that are failing, that are decrepit in one way or another, and that pass and transmit these natural shocks into the very poorest communities in the world. And then, of course, by adding to those human systems things like speculation in grain, we make things much, much worse.

      And so on.

  3. What most of us do not understand is not that prices are going up but that our money is worth less.
    The Quantitative Easing scam of the New York Federal reserve is slowly but surely doing the damage it is supposed to do: Driving us all into debt. A debt we are unable to pay back ever forcing us to sell of real world assets to the very people scamming us.

    Here is once again: Money as debt 1 and 2 and the Money Masters. Watch them and be afraid, be very afraid.

    • The Secret of Oz is equally disturbing http://www.youtube.com/watch?v=U71-KsDArFM
      The world economy is doomed to spiral downwards until we do 2 things: outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a “National Debt”. Remember: It’s not what backs the money, it’s who controls its quantity.

      It is against human nature to grasp the end of growth.

  4. john 4

    The Global Economy has reached the End Of Growth! Refer Richard Heinberg’s article in http://www.postcarbon.org

    “Why Is Growth Ending?

    Many financial pundits point to profound problems internal to the economy—including overwhelming, un-repayable levels of public and private debt, and the bursting of the real estate bubble—as immediate threats to the resumption of economic growth. The assumption generally is that eventually, once these problems are dealt with, growth can and will pick up again. But the pundits generally miss factors external to the financial economy that make a resumption of conventional economic growth a near-impossibility. This is not a temporary condition; it is essentially permanent.

    Altogether, as we will see in the following chapters, there are three primary factors that stand firmly in the way of further economic growth:

    * The depletion of important resources including fossil fuels and minerals;
    * The proliferation of environmental impacts(Climate Chaos from Climate Change) arising from both the extraction and use of resources (including the burning of fossil fuels)—leading to snowballing costs from both these impacts themselves and from efforts to avert them and clean them up; and
    * Financial disruptions due to the inability of our existing monetary, banking, and investment systems to adjust to both resource scarcity and soaring environmental costs—and their inability (in the context of a shrinking economy) to service the enormous piles of government and private debt that have been generated over the past couple of decades.
    Despite the tendency of financial commentators to focus only on the last of these factors, it is possible to point to literally thousands of events in recent years that illustrate how all three are interacting, and are hitting home with ever more force.” Richard Heinberg

    Also refer the following not only is growth ending but we will be going into reverse ie. Contracting Economies due to Oil Depletion! This will also lead to reducing Human Numbers as Fossil Fuel Carrying Capacity reduces. Refer link:
    Perhaps by the end of the century we’ll be down to a billion people!

    “If this is the new normal then the question will have to become how we divide the wealth we have. The elite already has its answer: the Great Recession has seen wealth concentrated even further in the hands of the few. If we let them, they’ll pull the same stunt again and again.”
    !00% agree Marty G If the rich get their way as is happening in the U$ We’ll be back to plantation days: They’ll own the plantation and the rest of us will be labouring on it at minimum rights,conditions and remuneration!

    • If the rich get their way as is happening in the U$ We’ll be back to plantation days:

      This will not happen, as people are only ‘rich’ if the token they hold can buy something, if the shops are empty the person with the biggest gang/gun will be the new ‘rich’
      There is more of us then there are of them, eventually we will all be one class – the hungry one 😉

      • john 4.1.1

        Hi R.A.
        Isn’t it equally likely a feudalistic system of food production will also happen with Land owners employing a very large segment of the working population in organic food production, so that at least we all survive. The land can be a privately owned,Plantation, or better, Socially owned by the people for the benefit of all. Social Organisation is bound to assert itself eventually despite perhaps a period of breakdown?

        • Robert Atack

          John M8

          First ‘we’ would need to maintain law and order .. some way?? and have the populace informed, because ‘we’ all expect XYZ .. IE the dole and the DPB, holiday pay, redundancy etc and when that stops people are going to get highly pissed, they will start demanding their ‘rights’
          It will happen fast, like I’ve tried to explain we only have a matter of weeks worth of fuel in storage in New Zealand, we have lots of food, but is it stocked piled in down town Auckland?
          We have hundreds of trucks moving all over the country distributing food (as an aside we move over 800,000 cars on trucks per year), there is slack in the system, so the trucks could be forced into only delivery essential things .. but for how long? The 105 pages document titled “Oil Demand Restraint Options for New Zealand” is available as a PDF file (924 KB) at < http://www.oilcrash.com/articles/odr_rep.pdf
          This is the only thing I've seen from any govt over the past 10 years, that remotely looks into what would happen if the tankers stopped arriving.
          One intresting point in this report – prisoners come before pensioners.
          Organic food will still take time to grow, if you have the land ready?
          If the government had started 10 years ago we may have avided this future http://www.youtube.com/watch?v=hbLgszfXTAY …. The Road .

        • Bored

          Interesting idea, I wonder whether we will as a society in free fall give any credence to the concept of private property? At the real heart of the issue is that the concept of “social” property has been marginalised from the conversation and planning. To a starving person with access to firearms (which is a very large proportion of the population)”social property” will be defined as what is needed and cannot be defended. That this “conversation” has not been pre-empted is the biggest indictment we have on our lack of forward planning as a polity to the unfolding resource issues.

      • Bored 4.1.2

        What is interesting is that the symptoms of reliance on non renewables is a very old human story, look around and tell me where the herds of bison are, where the cedars of the Lebanon, trees on Easter island, cod in the Atlantic are today etc etc. Today it is only different in terms of scale and concentration of depletion of all resources, we have hit the wall, and we are going down.

        The scary thing from a political viewpoint is the complacency toward the whole issue by both the left and right mainstreams. They both operate within the same framework, and cannot percieve the scale and immediacy of the changes that are in the wind. The arguments are all around deck chairs on the Titanic, the band is still playing but the party is over.

        The project of economic rationalism that is being played out today has major implications to what replaces it: the biggest issue will be the privatisation of resources, and the push by those who “own” to retain and expand what will become very valuable resource holdings. This is not the reason for the push by the right to privatise today, but it impacts the likely outcome. Expect trouble, resistance today has far greater future implications.

  5. randal 5

    looks like it.
    the show is over.
    all those morons tripping round the world to end up going home again and buying endless mountains of stuff to appease their internal feelings of psychological emptiness is all at an end.
    I dont feel sorryat all.

  6. john 6

    High Anxieties The Mathematics of Chaos
    James Lovelock Likens Climate Change to a downward slope which gets steeper and steeper until we fall off!
    Reminds me of Spurs of Ridges you’d want to avoid when tramping in the Tararuas!

    Climate Disruption is reducing food production and is one of the factors bringing an end to our growth civilisation now set for the Century of reverse or contracting economies.
    The Mad Hatters who have been telling us for 40 years Growth is the suicide of the Cancer Cell are being proven right. If we’d opted for a Steady State population and Economy everywhere we wouldn’t be in the proverbial DOO DOO we are most certainly in now all 7,000,000,000 of us Except the Plantation Owners of course!

  7. Logie97 7

    What price an Autumn or earlier election? Botany by-election will be deemed unnecessary.

  8. Bill 8

    There is something very wrong with that piece. It’s basically claiming that prices are rising because of simple supply and demand being affected by fast market growth or/and bad harvests. But by conveniently ignoring the actions of commodity speculators, deliberate and avoidable market dynamics and those sanctioning them, slip nicely off the hook.

    Take for example Russia. It has banned exports of it’s wheat due to its harvest being hit by drought. But the global wheat crop this year will be the third largest ever. In other words, Russia’s wheat harvest isn’t crucial in terms of supply and demand. And yet Mozambique felt compelled to rise it’s bread prices by 30% in August resulting in rioting and deaths when the police loaded up with live bullets cause they’d run out of rubber ones.

    This fully footnoted article is very much worth the read if you have an interest in the factors that lie beneath price hikes and food riots.

  9. john 9

    Very good article on 2011 being the year Oil breaks the $100 a barrel limit again and upwards!

    “Oil prices are starting to spin out of control once again. In London, Brent North Sea crude for delivery in February 2011 hit 91.89 dollars a barrel on Friday. New York crude moved above 88 dollars a barrel on Friday. Many analysts believe that 100 dollar oil is a virtual certainty now. In fact, many economists are convinced that oil is going to start moving well beyond the 100 dollar mark. So what happened the last time oil went well above 100 dollars a barrel?
    In July 2008, the price of oil hit a record high of over $147 a barrel. A couple months later all hell broke loose on world financial markets. The truth is that having the price of oil that high created horrific imbalances in the global economy. Fortunately the price of oil took a huge nosedive after hitting that record high, and it can be argued that lower oil prices helped stabilize the world economy. So now that oil prices are on a relentless march upward again, what can we expect this time?
    If the price of oil breaks the 100 dollar mark, it will be time to become seriously alarmed.

    If the price of oil breaks the 150 dollar mark in 2011 it will be time to push the panic button.”

    Refer link:

    • Colonial Viper 9.1

      IMO the ‘analysts’ have no freakin idea. They didn’t pick the last spike past US$150/barrel and they will not pick the next. The fact of the matter is that in the middle of the deepest global recession in decades, and largest falls in industrial output and consumption for decades, oil is still $80-90/barrel.

      In this kind of economic climate it should be <$40.

      What it tells me is this – the next excuse oil gets, it is going to scream past $120, 130, 140, 150, 160 per barrel. Any any nascent economic recovery on the day is going to be quietly strangled.

    • john 9.2

      Some Irish reactions to the peak oil report here linked:
      scroll down you can download the report in PDF for free 39 MB

      The reactions from ASPO Ireland’s site coverage of this report:

      “I didn’t even have to read the full report carried out in California – the main points highlighted all I need to know. This report like every other report released lately all express the same view:
      I can not for the life of me understand why the governments are not reacting quicker. (The looming climate & energy crisis makes the current fiscal crisis appear like a storm in a tea cup)
      We need urgent action but unfortunately not enough people are aware of what is coming in 2, 5, 10 etc years time if we don’t adjust now.
      Do governments take the issue seriously? or do they know and have prepared their own escape path and let the world’s population decrease with poverty, war, famine etc, because we need a clean slate to start again.
      I don’t have the answers but I wish someone with credibility would stand up in the public domain and at least start a debate and let people choose the blue pill or the red pill.”

      “It is kinda too late for governments to act, or even seriously discuss this problem and the ramifications. Why? Because we are so close to the edge now – so close to complete collapse – that any serious discussion of the consequences by any major governmental leader might just push us off the cliff immediately. Are you ready for complete collapse? I know I’m not; I’ve got plenty left to do to get ready. Yes, perhaps our species would be better off if the collapse happens sooner rather than later – but *I* wouldn’t, so I’m not going to complain that nobody’s talking about it much.”

      “There’s really not a lot to say anyway. There is no avoiding this problem. Once the fossil fuels dry up food prices will spike and we will not be able to produce *nearly* enough food for as many people as currently exist. Not even close. Sooo…a good five or six billion of us are destined to die miserably and there’s nothing any government can do to prevent that at this point.

      One thing I am grateful for: I had no children, by choice, so I need not fret that 80% or so of all children alive today or born in the near-future are going to die young. Every time I see a young child now, I cringe, knowing that their odds of ever reaching my age (46) are quite dismal.”

      Let’s hope it’s not that bad! Trouble is so many sober credible sane personable people are talking :That to put it very mildly our good times and easy street will shortly be history,I find this profoundly upsetting and saddening as anyone would.

      • M 9.2.1


        Information getting out is of the utmost urgency but politicians won’t do that because voters don’t want to be told they’re going to have to live with less. In both the US and NZ there is so much wasteful driving via trucks that could be avoided which would chop out a lot of fat in the system. Changes in attitude will be resisted because people will not want to give up their cars but will alter once huge price increases or supply disruptions occur.

        Having kids myself, I wonder what their lives will be like once I’m gone, but they have been well schooled in peak oil and have seen many films and documentaries almost to the point where they must think: not another bloody film on PO. They know life will become austere and that food growing will be done by most people as it was by Cubans when they got their taste of peak oil in the 90s.

        Like you I see parents of young children and pregnant women at the supermarket and often wonder if their children will make it to adulthood. Mine at least have had the opportunity to lay down good calcium deposits so they can avoid rickets but will need to be careful about dental health.

        Richard Heinberg’s ‘Peak Everything’ was a good read and he touched on how people respond to natural disasters versus man-made disasters and the different forms of PTSD and said in his book that even he lapses into thinking that things will be OK every so often.

        One thing that does get me thinking is that if the US could have a navy ship built in six weeks for the war effort the same mental attitude could be enlisted worldwide to at least get some infrastructure in place while we still have some fuel to ease the transition. People can either bemoan their fate or do something – I know what I’d prefer.

        • Colonial Viper

          Information getting out is of the utmost urgency but politicians won’t do that because voters don’t want to be told they’re going to have to live with less.

          The people need to make the politicians do the right thing. Which means a mass movement applying pressure on the pollies, more pressure than the roading groups and big oil can bring to bear. Quite a challenge.

          By the way you might like this:

          Spearheaded by Ray Mabus, President Obama’s secretary of the Navy and the former U.S. ambassador to Saudi Arabia, the Navy and Marines are building a strategy for “out-greening” Al Qaeda, “out-greening” the Taliban and “out-greening” the world’s petro-dictators. Their efforts are based in part on a recent study from 2007 data that found that the U.S. military loses one person, killed or wounded, for every 24 fuel convoys it runs in Afghanistan. Today, there are hundreds and hundreds of these convoys needed to truck fuel — to run air-conditioners and power diesel generators — to remote bases all over Afghanistan.

          Mabus’s argument is that if the U.S. Navy and Marines could replace those generators with renewable power and more energy efficient buildings, and run its ships on nuclear energy, biofuels and hybrid engines, and fly its jets with bio-fuels, then it could out-green the Taliban — the best way to avoid a roadside bomb is to not have vehicles on the roads — and out-green all the petro-dictators now telling the world what to do.


          • M

            Nice to know someone is thinking of alternatives and many Marines may get to keep their limbs.

            I could never understand why Bush/Chaney ran with a ‘America is addicted to oil’ and ‘The American way of life is not negotiable’ mantra and seemed to accept the inevitability of endless wars over oil instead of boxing clever and starving out “terrorism” via no oil receipts for the terrorists by using fuel carefully.

            Too many vested interests with the car/weapons manufacturers and the connected industries would pretty much put paid to any idea of conservation. From what I’ve read there are 486 jobs connected with each person employed as a car assembler in the US.

      • Robert Atack 9.2.2

        “One thing I am grateful for: I had no children, by choice, so I need not fret that 80% or so of all children alive today or born in the near-future are going to die young. Every time I see a young child now, I cringe, knowing that their odds of ever reaching my age (46) are quite dismal.”

        That reads like something I wrote 6 -7 years ago … when I was 46, THEY and and the general dumb public ignored me back then as well)

        • travellerev

          Interesting website. My husband drives with a Hydrogen cell saving us 30% and wants to improve on that (He’s an industrial electrician and build the cell himself with the help of some metal worker colleagues helping him with stainless steel off cuts of different size tubes) We are most definitely preparing for peak oil devastation. I’m grateful that while it was not our choice we are not leaving children behind either.

  10. alloverrover 10

    the NZ oil depletion blog oilshockhorrorprobe had a post on the Liam Dann article last week, in the context of media coverage of peak oil, including the excellent Christchurch Press feature article of 11 December. John McCrone has started to join the dots between a declining oil supply and a declining economy – something that Liam Dann failed to explore in his piece.


  11. Jan 11

    Energy is a different issue but resource sustainability can be addressed in part by adopting cradle to cradle manufacturing systems which require mandatory product management schemes. . That way it would be possible to stop for example sending tyres to landfill and re-using them for the valuable resources they contain. Unless waste is incinerated for energy the resources contained in goods can be re-used. Smart manufacturing helps as well of course – making things that can be pulled apart and re-used readily. In essence the only possible solution involves smart legislation to internalise the costs of wasteful production to the wasters to make it preferable for them to manufacture smartly as well as valuing the resources provided by the natural world properly. It doesn’t make economic sense for many businesses to do this – it’s always easier and more economic to waste and to use ‘virgin’ materials – except for the few businesses whose business model is based on leading edge green/recycling. Captcha stoppings

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