Oleoscenario: how oil shortages will spread around the world

Aerobar · Coal Joined: Nov 20, 2005 Posts: 12 Location: Paris

We at 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
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FireJack · Heavy Crude Joined: Mar 16, 2005 Posts: 451

It will never be such a smooth transition, crap 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 · Coal Joined: Nov 20, 2005 Posts: 12 Location: Paris

Colorado-Valley · Intermediate Crude Joined: Aug 16, 2004 Posts: 731

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 · Heavy Crude Joined: Jul 14, 2005 Posts: 497

FireJack · Heavy Crude Joined: Mar 16, 2005 Posts: 451

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 · Coal Joined: Nov 20, 2005 Posts: 12 Location: Paris

Beagle

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.
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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.
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jato

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 · Heavy Crude Joined: Oct 11, 2004 Posts: 447

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 .
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pup55 · Expert Joined: May 26, 2004 Posts: 3692

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