The Peak Oil Crisis: The German Army Report

[GliderGuider]

The Peak Oil Crisis: The German Army Report

Last year two military planning organizations went public with studies predicting that serious consequences from oil depletion will befall us shortly. In the U.S. the Joint Forces Command concluded, without saying how they arrived at their dates, that by 2012 surplus oil production capacity could entirely disappear and that by 2015 the global shortfall in oil production could be as much as 10 million b/d. Later in the year a draft of a German army study, which went into greater detail in analyzing the consequences of peaking world oil production, was leaked to the press. The German study which was released recently is unique for the frankness with which it explores the dire consequences which may be in store for us.

The Bundeswehr Transformation Center, the organization that prepared the study, starts with the assertion that as there are so many forces in play, it is impossible to determine an exact date for peak oil, but that it will become obvious in hindsight. The Germans also believe that it is already too late to complete a comprehensive global transition to a post fossil fuel economy. They introduce the notion of a peak oil induced economic "tipping point" that would trigger so much economic damage that it is impossible to evaluate the possible outcomes.

As oil is used either directly or indirectly in almost 90 percent of industrial production, major increases in the price of oil would change most price relationships. Domestic and foreign trade will have to adapt to these new relationships but doing so will likely lead to economic upheavals. As businesses transform to less oil-dependent forms of services and production, there would likely be an extended period of "transformation unemployment" that will become a major economic problem. A case could be made that our current "jobs" crisis is simply the leading edge of the "transformation unemployment" that could go on for decades.

In the medium term, most companies would come to realize that the global economy is going to be shrinking for a long time and act accordingly. In an indefinitely shrinking economy, savings would not be invested as profits could no longer be made or borrowing costs paid. In this environment, the banking system, stock exchanges and financial markets would have a hard time surviving. Banks would be left with no reason to exist as they would not be able to pay interest on deposits or find credit-worthy companies or individuals. The final step would be the loss of confidence in currencies and with them the ability to carry on normal economic transactions outside of barter.

This isn't some pimple-faced doom-blogger sitting in his mama's basement in his underwear. This is the friggin' Bundeswehr. Wakey, wakey!

[jwirr]

1. Thank you - sent it to the two people in my family with the intelligence

to try to plan for the future.

Nothing we did not expect and what is very scary is that we are so far into it without acknowledging it already. I am not sure a democracy is going to be able to address this situation because we can be so easily held hostage by groups such as the Tbaggers as we see in Congress.

I wonder who the US pentagon is sharing this with? Corporations and the rich are reacting exactly like I would expect them to act if they know - greedily - selfishly and uncaring. I also wonder if they told all of us the truth what would we do? Panic? Riot as if we can change the truth? Strike out at the rich?

Or would we get busy building a new sustainable world? Localize the world.

[formercia]

2. Those who adapt will be most likely to survive.

Human History is littered with civilizations that depleted their resource base and failed to prosper. This time it will be on a Global scale.

[GliderGuider]

3. Here's a link to the original story in Der Spiegel, and the translated report

Der Spiegel: Military Study Warns of a Potentially Drastic Oil Crisis

Bundeswehr Peak Oil Report (English) - PDF

Here are some of the potential effects the report foresees, as reported by Der Spiegel:

Politics in place of the market: Essentially the resurgence of mercantilism around oil.

Market failures: The potential for massive tax hikes in international trade as the cost of transportation rises. Resulting shortages of industrial goods and food. "In the medium term the global economic system and every market-oriented national economy would collapse."

Relapse into planned economies: As markets collapse, rationing and coercive government allocation and production policies could spread.

Global chain reaction: The global economy is now so tightly integrated that an economic crash in one regions will inevitably ripple to other parts of the world.

Crisis of political legitimacy: Democracy itself might not survive, as the crisis creates openings for ideological and extremist forms of government.

Who knew military planning groups were such doomers?

[kristopher]

4. From the sidebar at your link

Industry Harnesses Algae for Biofuel
http://www.spiegel.de/international/business/0,1518,706473,00.html

And from the sidebar at that page:
Boeing Executive
Algae Could 'Supply Entire World with Aviation Fuel
http://www.spiegel.de/international/business/0,1518,618859,00.html

Or this:
GE, GM Push Electric Vehicle Infrastructure For China
http://www.huffingtonpost.com/2011/09/22/ge-gm-push-electric-vehicle-chargers_n_975607.html


How do you think military spending has risen to the level it currently is; by looking at the way problems resolve themselves without military intervention?