[R-G] [BillTottenWeblog] The Peak Oil Crisis: The Blackouts Spread

[Bill Totten]

by Tom Whipple

Falls Church News-Press (July 16 2008)


Of the 266 distinct nations or entities on the world today, nearly 100
are now reporting continuing energy shortages, mostly in the form of
inadequate electricity supply, but in a growing number of cases,
shortages of liquid fuels and natural gas. The actual number of
countries affected is probably well over 100 but there are dozens of
isolated island-states scattered around the world that are rarely heard
from and are almost certainly suffering in silence while waiting for the
next oil tanker to come in.

The majority of these energy-short states are small, poor and play only
a minor role in world trade. While we should feel sorry for the plight
of their inhabitants who are, or shortly will be, enduring severe
hardships from greatly reduced supplies of electricity, water, food and
use of motor transport, the impact of their problems on the better-off
OECD world is likely to be minimal for a while.

Shortages, however, are not confined to small, poor states, but, in an
increasing number of cases, are appearing in large, relatively well-off
and active states on which the OECD world of North America, Europe and
parts of Asia are very dependent. Several of the countries having energy
problems are actually oil exporting states that, for one reason or
another, are not able to turn their increasing oil wealth into smoothly
functioning shortage-free economies. Unfortunately, several major
countries appear to be on the path to an energy shortage-induced
economic and perhaps political collapse within the foreseeable future
which obviously will have serious consequences for us all.

Currently, the most serious situations appear to be in Pakistan and
Bangladesh. Both are nations with populations in excess of 150 million
people that are ensnared in devastating power shortages that have
destroyed their export industries. Both are facing water and
agricultural problems that threaten their food supplies. Liquid fuels
are running short and reductions in exports threaten their ability to
import oil and natural gas. It was recently revealed that the Saudis
already are forgiving $6 billion of Pakistan's $12 billion annual oil
import bill.

On top of this, Pakistan has nuclear weapons and its strategic location
is vital to the course of the insurgency in Afghanistan. Worsening
blackouts, the liquid fuels shortage and probably the food situation are
likely to lead to serious political instability before the year is out.

The next important pair of countries in terms of their impact on western
economies is China and India, and although their situations are nowhere
near as serious as the problems in Pakistan and Bangladesh, both are
beginning to suffer from electricity shortages which will impact
economic growth. China, which now has a shortfall of around four percent
of its normal electricity production, is compensating by cutting back on
production of aluminum and zinc which consume prodigious quantities of
electric power. The recent earthquake has given Beijing pause in its
ambitious plans to expand hydro and nuclear power production. If China
cannot increase coal production rapidly enough to keep up electricity
generation for its rapidly expanding economy, it is likely to increase
imports of coal and oil keeping pressure on world prices.

So far there is no indication of an unusually large increase in Chinese
oil imports as there was during the power shortage four years ago. The
world price of diesel is simply too expensive to be used to generate
electricity for industrial production these days.

India's energy shortages are more serious than China's.

Its nuclear power plants are failing, hydro-power from the Himalayas is
drying up due to global warming, and the costs of imported fuels are
soaring. Over 85 percent of India's oil must be imported and coupled
with the subsidies of oil prices the increasing costs are taking a heavy
toll on the state budget. Although the situation in India is not yet as
bad as in Pakistan, blackouts and liquid fuel shortages are being
reported almost every day somewhere in the country. There is no end in
sight to this situation and likelihood of an economic slowdown, coupled
with water and food shortages, is increasing.

Several members of OPEC are having electricity and/or liquid shortages.
In Nigeria, and Iraq where there are active insurgencies that have
damaged the infrastructure, the shortages are endemic. Indonesia, which
is just about out of OPEC due to lack of exportable oil, is beginning to
face frequent power blackouts and fuel shortages. Even Venezuela and
Iran have occasional electricity and fuel supply problems as they are
trying to do without substantial foreign technical assistance. In
Mexico, demand for gasoline has outrun refining capacity and the country
is forced to rely on imports. There are now daily diesel shortages along
the border as Americans cross over to fill-up on subsidized half-priced
Mexican fuel.

Aside from the major oil-producing states, most countries in Africa,
Latin America and Central Asia are enduring some form of energy
shortages. In a number of important mineral producing countries such as
South Africa, Chile and Zambia, they have already reduced production due
to shortages of electricity and diesel fuel.

The global wave of blackouts and shortages is almost certain to get
worse. Although most governments have announced optimistic plans to
increase electricity production and bring oil to market within the next
few months or years, these are almost certain to fail. The cost of
building electrical generation capacity is soaring and finding
affordable fuel unlikely.

In the OECD world, the effects of these shortages is likely to be felt
in the form of much higher prices for declining exports from the
energy-poor. For the citizens of the energy-poor world, life is going to
become much harder very soon as electric lights, computers, motor
transport, refrigeration, fresh water and imported anything become
scarcer and scarcer.

http://www.fcnp.com/index.php?option=com_content&view=article&id=3301:the-peak-oil-crisis-the-blackouts-spread&catid=17:national-commentary&Itemid=79


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