[Aerobar]

We at http://www.oleocene.org (French-speaking PO community site) had developed last month a original Global Shortage Progress scenario. I have created this discussion thread because I do believe there are very few similar model-based thinkings within the PO community, and we will be interested by further comments on the model itself or on the way its results can be interpreted.

The starting point is the following: even once PO will be passed, richer countries will be able to maintain their oil consumption because they will buy barrels at a price that poorer countries can not afford any more. So we had built a model that allocate net oil exportations to the richer countries, to see where and when the nation-wide shortages will occur; then we had tried to imagine what could be the international geopolitics related to these shortages, with the optimistic assumptions that peace will be maintained to ensure offer-and-demand-ruled oil trade. What is interesting in this model is the fact that we do not have to do any assumptions on the barrel price itself. We use ASPO data only for the global depletion rate, other figures come from BP (2004 Review) and UN (GNP per country).

Here are the outputs of this exercise :

PO year
Sound shortages in the poorest countries of Asia, South America and Africa. These PO-passing markers could remain undetected, since they could be misinterpretetd as transient shortages, originating in high oil prices.

PO+3 years – Russia’s back
Most of the small East European countries run out of oil; Russia immediately seizes such an opportunity to restore its full regional leadership against UE and USA.

PO+5 – the Near East is hardly exploding
One year later, Egypt and Israel run simultaneously out of oil: the Near East is more than ever a time bomb. Direct US support to Israel (oil for Tsahal, maybe troops) is highly probable to prevent invasion, in complement to Israel’s nuclear shield.

PO+7 – Asia is stalling
Indonesia, Australia, South Korea, Taiwan and India successively run out of oil.

PO+10 – The Crisis is now global
A third of UE members, as well as Brazil and Argentina are out of oil: world growth is definitely damaged.

PO+15 – WW3 conditions
Between 10 to 15 years after PO, China and Canada will experiment the life without oil. Other Gx members will then experience the ordeal in the next years. At this time, regional wars for the control of the last oil & gas fields are more than likely to occur.

PO+30 – the Middle-East rules the World
National oil shortages have striked Russia and USA. Only Saudi Arabia, Iran, Iraq, Emirates and Kuwait can still fuel their national economy with oil, as well as some isolated castles in the rest of the world: Norway, Venezuela, Ecuador. If not already colonized, they are now among the Masters of the Universe...

Details (in French) of the model (assumptions, precise shortage dates for 80 countries) can be found on the wiki of Oleocene.org

[FireJack]

It will never be such a smooth transition, shit will happen. I have no intention of trying to predict what might happen just what I know will happen. We are all going to have to reduce our energy consumption, peacefully or kicking or screaming.

Or course we might just stip mine this planet bare, which is a very lickly possibility.

[Aerobar]

We are all going to have to reduce our energy consumption, peacefully or kicking or screaming.

This is effectively an option.

Our case is about another option, which is fed by the egoism of richer nations, even if a few of their citizens had decided to reduce their consumption. When comparing the audience of SUV fans' forums to the PO-related ones, I think our case is unfortunately not so irrealistic

[Colorado-Valley]

Are you saying that as we move into post-peak, the U.S. will somehow keep its oil prices artificially low?

This is a nation of vast sprawl and vast debt. Anything like fuel over $3 a gallon starts to collapse the whole enterprise.

We don't have a Paris Metro, we have hundred-mile commutes to marginal jobs. Fuel must stay cheap for this to work.

[AmericanEmpire]

Are you saying that as we move into post-peak, the U.S. will somehow keep its oil prices artificially low?

Yeah, I don't see how Canada is going to run dry before the USA we get most our imports from Canada.

The only way that could happen is for the USA to take the oil by force and not let the Canadien citizens have any.

[FireJack]

US gets most of their oil from the saudi's, not canada. We have lots of natural gas but not oil. The oil sands are not exactly gushing oil out at the moment.

[Aerobar]

Are you saying that as we move into post-peak, the U.S. will somehow keep its oil prices artificially low?

This is a nation of vast sprawl and vast debt. Anything like fuel over $3 a gallon starts to collapse the whole enterprise.

We don't have a Paris Metro, we have hundred-mile commutes to marginal jobs. Fuel must stay cheap for this to work.

This is only a simple simulation, built with a very small number of parameters - not a prediction! It mainly shows that, in a world ruled by 'perfect' offer+demand rules, there is a clear possibility that the post-PO collapse could be slow and extending progressively from the most under-developed countries to the richest nations.

Paris Metro is useful for only 5% of the French population... and despite the gasoline here costs more than $5 a gallon, the country keeps working . Don't be so pessimistic, USA is stronger than you feel!

[Beagle]

US gets most of their oil from the saudi's, not canada. We have lots of natural gas but not oil. The oil sands are not exactly gushing oil out at the moment.

Unfortunately, you're wrong on that point. The largest percentage of US oil imports comes from Canada. Around 17%. Saudia Arabia is approx. 13% I believe. Check Here

[0mar]

It's not about running dry. It's about keeping a steady flow.

A slight, sudden drop in oil production is the same as going for a week without water to the human body. A week doesn't sound like much, but most people are dead after 3-4 days.

That timeline is way too optimistic. I simply do not see a way to have a smooth transition without some sort of 1984 control over the general populace.

[benzoil]

I've often wondered about this. Given that rich countries will outbid the poor ones for scarce resources, how will collapse progess? The U.S. will get hit hard, but I'll bet that even when diesel is $10/gallon, we'll find a way to get it into our tractors at harvest time. Not so in the third world. Or even the second.

My French is terrible otherwise I'd love to see the details/assumptions. 15 years after PO sounds like a long time, but things rarely unfold as fast as we expect. Peak Oil will be the ultimate slow motion train wreck for those of us paying attention.

[jato]

PO+30 – the Middle-East rules the World

Then the Middle-East better stop wasting their money on palaces and expensive cars. Instead, they better get busy building nuclear weapons and the conventional forces to protect and deploy them. Right now, they couldn't stop a superpower from walking in and taking the region.

[evilgenius]

Does the model make any predictions about the value of the dollar? It would be greatly effected, by two or three years by the possible actions of the Fed. I think especially if interest rates are raised in order to boost the buying power of the dollar. Sure, that would be a short term solution but if other economies in the world are shipwrecked as a result then a rate lowering well placed would not be so destructive to the US domestic economy. If the Fed chooses instead to initiate inflation and devalue the dollar it might speed things up.

[chris-h]

fantastic job Aerobar . I love it.

jato a superpower in such a scenario could not invade and take the region without triggering a nuclear war .

[pup55]

I think the above is pretty plausible.

We are already seeing problems in places like Bangladesh, and Somalia and Zimbabwe.

I always thought that the main factor in this would be when the cost of the oil outweighs the incremental economic benefit that the barrel of oil provides. At that point, whatever that activity is, people will not do it anymore.

Example: the average barrel of oil in Poland generates about $200 of per-capita GDP. In the US, it's about $600. So, the proverbial average activity in Poland will cease to make sense when oil reaches that high, but the similar activity in the US will still be economically viable. As the oil price increases, the countries who use the oil most efficiently, to generate GDP. will still be able to use it. Examples: Italy, Japan.

So maybe there are four groups:

a. Brink of disaster nations such as the three above. We can add a few others: Philipines, Indonesia, some of the less developed countries in South America such as Peru and Colombia might fall in here. One can make the argument that Cuba falls into this group.

b. Industrialized but inefficient nations, such as the old Eastern countries, plus Mexico, plus such nations as Iran and Venezuela and Nigeria which have big populations and a relatively large internal consumption of oil. At this point, certain activities in the US and Europe that are not economically effective use of oil from the standpoint of generating GDP will also stop.

c. Industrializing nations that have their own oil supplies might hang in there for awhile because their big populations are used to living relatively simply: Examples; Brazil, China, Russia, maybe India falls in this group. Although they have big populations, they are not used to the western-like uses of oil (such as driving) and might be more sustainable.

d. Industrial nations in order of their economic energy efficiency: Maybe the inefficient nations (Australia, Britain, USA) will see the effects at the same time as the countries in B and C, but Japan and Italy will still be able to hang in there for awhile longer. Canada and Germany might fall into the middle of this group. Probably the scandinavian countries, with relatively low populations plus already on the way to developing alternative energy sources will be able to hang in there for quite awhile.

Two other things to consider: Right now, the actual economic cost of oil to the USA is the actual oil price, plus the amount of taxpayer money drained away frmo the economy and spent on defense to defend the supply. Any economic calculation has to count this as a cost to the taxpayers (or future generations).

Also, a lot has to do with the agricultural system in place in whatever country you are talking about. Right now (shockingly) 50% of the chinese population is engaged in agriculture, that is to say, still a lot of manual labor to feed the population. Compare this to 0.2% or something for the US, and probably pretty similar for western Europe. The lower this number is, the more vulnerable the country will be to a cutoff in oil supply.

[Kingcoal]

d. Industrial nations in order of their economic energy efficiency: Maybe the inefficient nations (Australia, Britain, USA) will see the effects at the same time as the countries in B and C, but Japan and Italy will still be able to hang in there for awhile longer. Canada and Germany might fall into the middle of this group. Probably the scandinavian countries, with relatively low populations plus already on the way to developing alternative energy sources will be able to hang in there for quite awhile.
d. Industrial nations in order of their economic energy efficiency: Maybe the inefficient nations (Australia, Britain, USA) will see the effects at the same time as the countries in B and C, but Japan and Italy will still be able to hang in there for awhile longer. Canada and Germany might fall into the middle of this group. Probably the scandinavian countries, with relatively low populations plus already on the way to developing alternative energy sources will be able to hang in there for quite awhile.

Correct me if I'm wrong, but I've read that Canada has the highest per capita consumption of energy in the world, higher than the USA.

[pup55]

Here is GDP per barrel of oil consumed:

GDP by country

Oil consumption is from the BP statistical review.

Code: Select all

country   gdp per bbl
Uzbekistan   231329
Kazakhstan   48571
Taiwan   27831
Iceland   20144
Greece   14178
Turkmenistan   12143
Bangladesh   7815
New Zealand   7747
Sweden   7200
Indonesia   6689
Qatar   5825
Peru   5682
Hungary   4238
Slovakia   3890
Czech Republic   3460
Finland   3249
Colombia   3137
Portugal   3050
Ecuador   3020
China   2753
Netherlands   2483
Switzerland   2407
Denmark   2316
Austria   2147
Saudi Arabia   2128
Argentina   2109
Poland   2093
Algeria   2052
United Arab Emirates   2047
Brazil   2016
Chile   1853
Australia   1738
Thailand   1737
Turkey   1695
Spain   1683
Belarus   1622
Germany   1598
Lithuania   1554
Romania   1525
Bulgaria   1479
Pakistan   1317
Iran   1267
Kuwait   1207
Canada   1162
Belgium & Luxembourg   1100
Philippines   1090
Norway   1035
Azerbaijan   928
Singapore   879
Japan   736
Italy   720
South Korea   506
South Africa   357
Venezuela   309
Mexico   295
Republic of Ireland   266
Ukraine   224
Egypt   205
USA   203
France   187
Russian Federation   175
Malaysia   170
United Kingdom   81
India   8

[pup55]

And here is the above table, divided by population (X1000 to make the table tidy)

Code: Select all

country   GDP per barrel per 1000 population
Iceland   73.9191
Uzbekistan   9.5977
Qatar   8.0510
Kazakhstan   2.8869
Turkmenistan   2.7809
New Zealand   2.1155
Greece   1.3242
Taiwan   1.2586
United Arab Emirates   0.8732
Sweden   0.8080
Slovakia   0.7209
Finland   0.6298
Kuwait   0.6063
Lithuania   0.4334
Denmark   0.4324
Hungary   0.4161
Czech Republic   0.3366
Switzerland   0.3309
Portugal   0.3075
Austria   0.2638
Singapore   0.2488
Ecuador   0.2404
Norway   0.2331
Peru   0.2134
Bulgaria   0.1805
Netherlands   0.1571
Belarus   0.1559
Chile   0.1237
Azerbaijan   0.1173
Belgium & Luxembourg   0.1037
Saudi Arabia   0.0990
Australia   0.0925
Colombia   0.0798
Republic of Ireland   0.0733
Romania   0.0683
Algeria   0.0659
Bangladesh   0.0615
Argentina   0.0574
Poland   0.0542
Spain   0.0430
Canada   0.0375
Indonesia   0.0310
Thailand   0.0287
Turkey   0.0258
Germany   0.0195
Iran   0.0194
Philippines   0.0137
Venezuela   0.0133
Italy   0.0127
Brazil   0.0117
South Korea   0.0108
Pakistan   0.0095
South Africa   0.0082
Malaysia   0.0079
Japan   0.0058
Ukraine   0.0045
France   0.0032
Egypt   0.0030
Mexico   0.0029
China   0.0022
United Kingdom   0.0014
Russian Federation   0.0012
USA   0.0007
India   0.0000

Population stats

[pup55]

So, on further review, I take back some of what I said above.

The point was, the countries that are inefficient at turning oil into GDP will lose their oil first. To be specific, the activities in these countries which are inefficient generators of GDP will be the first to go. In the US, it's all of that wasted gasoline.

The inefficient countries with big populations will be hard hit. I checked the data for India several times, and I can't come up with anything other than that they are screwed when the peak hits.

The scandinavian countries, with small populations who are relatively efficient on energy are near the top of the list.

[Doly]

I imagine your reasoning is that countries that have low GDP per capita per barrel are more dependent on oil. Then, countries at the bottom of the list are screwed.

But things aren't necessarily that simple. Take Greece, for example. Right now it's nicely at the top of the list. But when oil is expensive, tourism reduces. And tourism is a nice part of Greece's GDP.

Also, you should take into account barrels imported, not barrels used. Oil exporting countries are OK as long as they can keep producing. Oil producing countries, even if they have to import part of their oil, are in a better situation than those who don't produce oil at all.

I think a better measure of how screwed a country is would be something like this formula:

(GDP - income from tourism - imports)/(population x barrels imported)

Can you make the list?

[pup55]

Hmmm....

(scratches head)

Re: adjusting for tourism: There are plenty of other non-value-added activities that go into computation of GDP, as has been suggested on this board previously. Examples: lawsuits, liposuction, the NBA.

If we adjust Greece, we will have to adjust the rest of them.

I agree that there needs to be some kind of adjustment for barrels imported and also exported. Example: If you figure out how much of the Uzbekistan economy is due to exporting oil, and then back work to compute the non-oil portion, then divide by population, this might be a more interesting number.

I will think about this some more.