Saturday, October 12, 2013

German Army Peak Oil Study - Doom for the PAP

I've written quite a few blogposts on oil & this is an important issue which i will continue to blog about. In November 2010, the German Military released a study on the effects of Peak Oil. This 10min video summarizes that study:

For the peasants living on this tiny island, we can look forward to the demise of the domination of the hybrid regime(PAP; People's Action Party). The latest news is that 30% of consumers in Singapore say that they will have to make significant spending cuts in other areas to cope with rising food prices. 30% of people struggling is a 'low' figure since we know the hybrid regime with its media control & propaganda would avoid publishing the higher figure.

The hybrid regime cannot control the global oil market & hence it can't manipulate supply & demand. To understand why the hybrid regime is doomed, try picturing oil depletion rates & rising consumption as 2 ends of a matchstick - both ends burning.

Chris Martenson's scary example isn't just a scenario, but a reality for many exporting countries
Suppose we have a hypothetical country that produces 3 million barrels of crude oil per day, consumes 1 million barrels per day & exports the balance of 2 million barrels a day. All things being equal, it can export those 2 million barrels year after year. But now let's suppose that its oil field is declining due to depletion issues at a modest 5% a year. After 10 years, instead of 2 million barrels a year, this country can now only export 0.89 million barrels of oil a day, or less than half the prior amount. The missing balance has depleted away & it cannot export what it doesn't have. Now comes the kicker: 

Let's further suppose, quite realistically, that this country increases their internal demand for oil at a rate of 2.5% a year. What happens to exports in this case, where internal demand is rising & production is falling?

1 end of a matchstick burning - 5% decline in global oil production
Consumption at steady rate is a fairy tale in the developing countries. Without rising energy consumption the developing nations economies cannot grow bigger.

2 ends of a matchstick burning - 5% decline + 2.5% increase in consumption
2013 to 2035 is 22 years.
Let's be conservative:

  • More than double by 2035 --> double by 2035

To achieve doubling in 22 years would require 3.2% increase/year. In simpler terms, if your salary increases 3.2%/year, after 22 years in 2035 your salary would be doubled.

Instead of 3.2%, we'll use Chris Martenson's 2.5% as a conservative figure.

In year 10, exports have shrunk to 642,000 barrels which is just 31% of the original 2M barrels of oil. With dwindling supplies, i've blogged that Malaysia & Singapore Preparing for High Oil Prices .

Peasants have seen how high demand + limited supplies of public housing orchestrated by the hybrid regime have propel housing prices to absurd levels. Similarly when high oil prices lead to rising food prices, we can expect >50% of peasants to toss the hybrid regime out at the polls.

There's no escaping doom for the hybrid regime. A brighter future awaits the peasants thereafter.

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