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Military Study Warns Of A Potentially Drastic Oil Crisis

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A lot of serious people are taking this Peak Oil business very seriously it seems.

Enjoy.

http://www.spiegel.de/international/germany/0,1518,715138,00.html

A study by a German military think tank has analyzed how "peak oil" might change the global economy. The internal draft document -- leaked on the Internet -- shows for the first time how carefully the German government has considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time when global oil reserves pass their zenith and production gradually begins to decline. This would result in a permanent supply crisis -- and fear of it can trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an institution like the Bundeswehr, the German military, uses the term "peak oil" at all. But a military study currently circulating on the German blogosphere goes further. The study is a product of the Future Analysis department of the Bundeswehr Transformation Center, a think tank tasked with fixing a direction for the German military. The team of authors, led by Lieutenant Colonel Thomas Will, uses sometimes-dramatic language to depict the consequences of an irreversible depletion of raw materials. It warns of shifts in the global balance of power, of the formation of new relationships based on interdependency, of a decline in importance of the western industrial nations, of the "total collapse of the markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in government circles, was not meant for publication. The document is said to be in draft stage and to consist solely of scientific opinion, which has not yet been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains doubtful that either the Bundeswehr or the German government would have consented to publish the document in its current form. But the study does show how intensively the German government has engaged with the question of peak oil.

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the Guardian newspaper reported that the British Department of Energy and Climate Change (DECC) is keeping documents secret which show the UK government is far more concerned about a supply crisis than it cares to admit. According to the Guardian, the DECC, the Bank of England and the British Ministry of Defence are working alongside industry representatives to develop a crisis plan to deal with possible shortfalls in energy supply. Inquiries made by Britain's so-called peak oil workshops to energy experts have been seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process, telling the Guardian the enquiries were "routine" and had no political implications.

The Bundeswehr study may not have immediate political consequences, either, but it shows that the German government fears shortages could quickly arise.

Part 2: A Litany of Market Failures

According to the German report, there was "some probability that peak oil will occur around the year 2010 and that the impact on security is expected to be felt 15 to 30 years later." The Bundeswehr prediction is consistent with those of well-known scientists who assume global oil production has either already passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:

  • Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: "The relative importance of the oil producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading power."
  • Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favour with oil producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, "this could result in a more aggressive assertion of national interests on the part of the oil producing nations."
  • Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. "The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts," the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. "Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the seventies, will once again come to the fore."
  • Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. "Shortages in the supply of vital goods could arise" as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95% of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. "In the medium term the global economic system and every market-oriented national economy would collapse."
  • Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a "partial or complete failure of markets," says the study. "A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis."
  • Global chain reaction: "A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil," says the study. "It is likely that a large number of states will not be in a position to make the necessary investments in time," or with "sufficient magnitude." If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it's so tightly integrated into the global economy.
  • Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could comprehend the upheaval trigged by peak oil "as a general systemic crisis." This would create "room for ideological and extremist alternatives to existing forms of government." Fragmentation of the affected population is likely and could "in extreme cases lead to open conflict."

The scenarios outlined by the Bundeswehr Transformation Center are drastic. Even more explosive, politically, are recommendations to the government that the energy experts have put forward based on these scenarios. They argue that "states dependent on oil imports" will be forced to "show more pragmatism toward oil-producing states in their foreign policy." Political priorities will have to be somewhat subordinated, they claim, to the overriding concern of securing energy supplies.

For example: Germany would have to be more flexible in relation toward Russia's foreign policy objectives. It would also have to show more restraint in its foreign policy toward Israel, to avoid alienating Arab oil-producing nations. Unconditional support for Israel and its right to exist is currently a cornerstone of German foreign policy.

The relationship with Russia, in particular, is of fundamental importance for German access to oil and gas, the study says. "For Germany, this involves a balancing act between stable and privileged relations with Russia and the sensitivities of (Germany's) eastern neighbors." In other words, Germany, if it wants to guarantee its own energy security, should be accommodating in relation to Moscow's foreign policy objectives, even if it means risking damage to its relations with Poland and other Eastern European states.

Peak oil would also have profound consequences for Berlin's posture toward the Middle East, according to the study. "A readjustment of Germany's Middle East policy … in favor of more intensive relations with producer countries such as Iran and Saudi Arabia, which have the largest conventional oil reserves in the region, might put a strain on German-Israeli relations, depending on the intensity of the policy change," the authors write.

When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment on the study.

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A lot of serious people are taking this Peak Oil business very seriously it seems.

Enjoy.

http://www.spiegel.d...ional/germany/0,1518,715138,00.html

If I recall correctly the US military and govt commissioned (and were alarmed by) the Hirsch Report back in early 2005. Which is about when I started to get worried about the issue to.

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If I recall correctly the US military and govt commissioned (and were alarmed by) the Hirsch Report back in early 2005. Which is about when I started to get worried about the issue to.

I also concur that i read about this subject first around late 2004. I did some serious reading about the subject, and i think that to dismiss it is alarming.

Net oil exporting countries are dropping big time. One only has to look at our own since gone petro state and look at Mexico's drop's in net exports as well as Kuwait to see we may have a problem, a very big problem. Hence the frenzy and news reports of a few days global consumption that is found in a puddle here and there these last few years. Then throw in the Geopolitics of energy as well as population density in oil exporting countries like Saudi and a bit of peak potash and we have finally woken up to the fact that our fallacy with growth and a money system linked to it is falling apart around our very ears.

What ever damn oil we may have left in the north sea, needs to be used to prepare oursleves for a very different way of life, starting later this decade (maybe not even that far out). I still say that the rear view mirror view all the experts say about peak oil is correct, and these last few years of global financial calamity are linked.

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I also concur that i read about this subject first around late 2004. I did some serious reading about the subject, and i think that to dismiss it is alarming.

Net oil exporting countries are dropping big time. One only has to look at our own since gone petro state and look at Mexico's drop's in net exports as well as Kuwait to see we may have a problem, a very big problem. Hence the frenzy and news reports of a few days global consumption that is found in a puddle here and there these last few years. Then throw in the Geopolitics of energy as well as population density in oil exporting countries like Saudi and a bit of peak potash and we have finally woken up to the fact that our fallacy with growth and a money system linked to it is falling apart around our very ears.

What ever damn oil we may have left in the north sea, needs to be used to prepare oursleves for a very different way of life, starting later this decade (maybe not even that far out). I still say that the rear view mirror view all the experts say about peak oil is correct, and these last few years of global financial calamity are linked.

+1 We are going to return to a period of energy scarcity. This current credit bubble is the last gasp of the 19th & 20th century's paradigm of infinite expansion. I believe the rest of the 21st century will be very, very different.

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+1 We are going to return to a period of energy scarcity. This current credit bubble is the last gasp of the 19th & 20th century's paradigm of infinite expansion. I believe the rest of the 21st century will be very, very different.

This is exactly the reason why I have my Canadian Citizenship ready and complete :) A nation with the 2nd largest oil reserves, but one that doesn't presently need to draw on them anything like the others (OPEC, Russia etc).

My advice to anyone... make preparations to leave the UK. It's ruined today, but could you imagine a peak oil crisis on top!

Edited by jakeshaw

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If I recall correctly the US military and govt commissioned (and were alarmed by) the Hirsch Report back in early 2005. Which is about when I started to get worried about the issue to.

Are there any smart people in the army? As the price rises many new sources become available. The germans were converting coal into gasoline during world war 2. I understand this becomes economic at around 200 dollars a barrel. There is still a lot of coal...

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It's some people's jobs to go on thinking excursions like this.

I've run scenario planing workshops for companies myself. Scenario planing as a tool came into popularity after Shell used it to consider the possible impacts of an oil price spike prior to the Yom Kippur war in the 1970s, and a collapse - to $16 a barrel don;t forget - in the 1980s, and others including BP didn't ... Shell had made plans for such scenarios that they quickly enacted, and Shell ended the 80s as one of the strongest players in the field.

Of course they also looked at for - and planned for- MANY other scenarios that didn't materialise..

Often extreme scenarios are used to flush out as many possible impacts as possible and are set alongside other scenarios, some equally extreme, in order to consider how situations might interact.

Usually no-one expects the worst to arrive it's just a thinking and planning tool to help calibrate risk. When tin foil hat bloggers read reports like this and get a big stiffy, they are generally acting in total ignorance of the context for which they were created and used.

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It's some people's jobs to go on thinking excursions like this.

I've run scenario planing workshops for companies myself. Scenario planing as a tool came into popularity after Shell used it to consider the possible impacts of an oil price spike prior to the Yom Kippur war in the 1970s, and a collapse - to $16 a barrel don;t forget - in the 1980s, and others including BP didn't ... Shell had made plans for such scenarios that they quickly enacted, and Shell ended the 80s as one of the strongest players in the field.

Of course they also looked at for - and planned for- MANY other scenarios that didn't materialise..

Often extreme scenarios are used to flush out as many possible impacts as possible and are set alongside other scenarios, some equally extreme, in order to consider how situations might interact.

Usually no-one expects the worst to arrive it's just a thinking and planning tool to help calibrate risk. When tin foil hat bloggers read reports like this and get a big stiffy, they are generally acting in total ignorance of the context for which they were created and used.

I'll admit to having a pathological attraction to tfh scenarios (probably due to my younger years as an avid sci-fi reader), but in this instance I don't see that the report is presented as some kind of war game or scenario development. The same applies to other reports such as the Hirsch report mentioned above.

What makes you think this is not their baseline scenario?

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This is exactly the reason why I have my Canadian Citizenship ready and complete :) A nation with the 2nd largest oil reserves, but one that doesn't presently need to draw on them anything like the others (OPEC, Russia etc).

You're referring to the Tar/Oil Sands?

A resource that is financially viable when oil is expensive - which obviously it will be again at some soon point - but also a resource where one has to use large amounts of energy to extract and refine it, I believe gas is being used, as well a huge amounts of water causing widespread pollution; net energy gain is definitely a minus figure.

The environmental impact is just staggering, and frankly depressing.

The biggest single indication to me that entire nations are willing to put their fingers in their ears and chant 'La la la la la' whilst there's a buck to be made, screw the long term effects.

Edited by OMG

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This is exactly the reason why I have my Canadian Citizenship ready and complete :) A nation with the 2nd largest oil reserves, but one that doesn't presently need to draw on them anything like the others (OPEC, Russia etc).

My advice to anyone... make preparations to leave the UK. It's ruined today, but could you imagine a peak oil crisis on top!

Interesting, I've gone the other way. I bought a flat in Moscow back in June with preparations for a permanent move out there in October.

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would oil-scarcity lead to greater or lesser demand for other mineral commodities - building materials and base metals etc?

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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