Some want the world simpler than it really is… Curiously few saw expensive oil come. Now some predict war as the way out all too readily (and that prediction can be used as an excuse to not look for (policy or energy) alternatives, in the name of entrenched interests). In truth, what should be predicted should rather be the end of US waste and preset ways…
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WORLD OIL RECESSION ONLY ABOVE $200:
The $120 per barrel oil price of April 2008 regained the inflation adjusted price peak of 1980 (in 2008 dollars; in 1980, an Arab oil embargo was enacted to protest the US military support of Israel in the Yum Kippur war).
In 2004, investor Marc Faber, of “The Gloom Boom & Doom Report” observed that the Chinese car population had decupled already, while if China used as much oil as Mexico, per person, it would consume as much as 30% of the existing world’s oil production (an impossibility, except if China accepted to pay more for its oil that anybody else… or if China played Tibet with the Middle East, a role in which others are already starring). The supply of oil cannot grow: no major oil field was discovered in more than 40 years.
World oil production is not augmenting anymore, but demand is: the five billion strong world underclass, the fastest growing segment of the world population, unsatisfied with its lack of power, wants energy too. Oil has the highest density of energy (short of nuclear). Some say there is plenty of oil to be had. They evoke tar sands (as in the Canadian province of Alberta). Others suggest to make oil out of coal (as Hitler did in his little plan to conquer the world). Both cause such immense pollution and carbon emission problems that they have no positive long term economic justification, on a planetary scale. True, long term we are all dead, but coal and tar, a form of smoking, is a bit too quick that way.
Still another proposition has been to exploit the super gigantic deposits of oil in shale rock in the mountains of the US West. Unfortunately, the easiest way to get the oil out is to heat the rock in situ, and lots of it would escape and pollute the water table (although the flight of fancy of freezing back the rock in vast cylinders has been grotesquely suggested). Clean water itself will soon be more precious than oil (all the more since one needs energy to extract it from shrinking, deep underground aquifers).
Thus the price of oil will go the sky: there is no substitute (yet). Even if the West became super efficient, cutting its energy usage by half, the six billion who want to go from close to zero energy usage to something non negligible will cause most of the future demand. Demand will abate only when the price is so high that it causes a world (growth) recession.
So when will there be an oil price induced world growth recession? Energy usage efficiency has roughly doubled since 1980, thanks to more advanced tech: twice more GDP is created for the same energy unit. Thus oil would have to reach around $240 to create a stress comparable to that of the seventies (except this time the rise is slower, so it may need to go even higher). The USA would be badly hit well before that, considering its inefficient economy. The EU could muddle through by reducing the taxes on gasoline to keep it around $10 a gallon as it is now; in some regions of France local taxes on gasoline have been decreased.
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… BUT NO WORLD WAR:
Marc Faber has a simplistic view of what brought the two world wars in which fascism was involved. He wrote: “in the case that oil prices were to rise in real terms to their 1980s highs – well over US$ 100 – then the foundation for World War Three would be laid … “
Indeed it is true that oil contributed both to W.W.I and its second round, W.W.II. Hitler’s friends at Texaco gave him the oil he needed for his early years, true. Yes, Texas oil was all over Guernica, thank you, Uncle Sam! In both world wars, Germany, which had no oil, but frustrated imperialistic dreams, desperately wanted to get some (oil is much more efficient than coal in ships, let alone in tanks and planes!). Hitler and company used oil as still one more reason for invading Poland. But the invading Nazis got short circuited by their buddy, the crafty Stalin (who got to Polish oil first). Then Hitler targeted the Soviets’ main oil, in the Caucasus. The Nazi assault through North Africa targeted another major oil source, Iraq.
Marc Faber (not an American but a Swiss), seems to be implicitly assuming that the USA is as badly obsessed as Hitler’s Reich, and will keep on invading for oil (as Hitler did). But that is overestimating the present gullibility of the US public and his military men (even Hitler’s military men rebelled in the end, in a society that had not known democracy for 2,000 years). Since everybody now knows that powerful armies have been sent to invade for oil by the world’s worst criminal idiots, many times over, another world war should not happen again that way.
True, for years, US opinion makers have insisted that the USA could not afford an energy policy of research and innovation. Even in 2008, all money towards the US contribution to the experimental thermonuclear reactor ITER was cut off. Meanwhile, France, with a much more efficient economy, emits not even a third of the CO2 that the US does, per person. But such facts as this are slowly percolating up common US consciousness… Even bomber pilots on giant US aircraft carriers in the Gulf are starting to wonder what they are doing there.
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WORLD WAR TWO OCCURRED WHEN AGGRESSION WAS LEFT UNPUNISHED:
The fundamental path to W.W.II was purely psychological. Before Hitler (and militaristic Japan) got obsessed by oil, they got used to get things by force, and get away with it. Thus, as what happened then, the real danger is that several of the major powers engage in a competition of unpunished brutality, encouraging each other down the pernicious slope of stealthy fascism.
Mussolini started “fascismo”, Lenin the “dictatorship of the proletariat”, both encouraged the rise of Nazism; in turn Hitler made Mussolini more fascist, and then the “Axis” was formed with Japan, boosting the later’s fascism, and then Hitler, worried by France, allied with Stalin; at that point all the fascists were allied with each other, in a terminal fight with democracy (only France was really in the way; US capitalists were massively helping Hitler; the UK was doing an awkward 180 degree turn).
Thus, should one want to avoid W. W. III, one would discourage drifts towards unnecessary brutality: they can be contagious and mutually sustaining. Fascism was in fashion before W.W. II. That’s why it’s encouraging that enough people make enough waves about Iraq and Tibet to cause great powers to reconsider (maybe). The tipping point into generalized fascism (hence world war) would be reached if not enough people could be found to accomplish this.
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Patrice Ayme
Ref.: Marc Faber http://www.ameinfo.com/47129.html.
P/S: OPEC President Chakib Khelil on April 28 2008 declared that the sharp rise of oil had to do with the fall of the US Dollar (which it obviously does, in part). What we said above is that there is a natural (and increasing) upper bound to the rise of the price of oil, and that it is pretty high, and naturally rising, as energy efficiency rises. But it’s way higher than what the USA can stand, and that is why it invaded Iraq, as peak oil was reached (the audacity of hoping for IRAQ AS THE NEW AMERICAN OIL STRATEGIC RESERVE). That theoretical peak oil production could be higher by using very deep, or very heavy oils and coal is irrelevant, the global cost being way too high.
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