Japan's economy is tanking

Has Japan Run Out Of Cans To Kick?

Zero Hedge,

8 March, 2012

Japan's Trade and Current Account imbalances appear to be hitting some kind of terminal velocity and while neither JGBs nor CDS seem to reflect the ensuing chaotic recognition that perhaps the can that has been so faithfully kicked down the "Nishi-no-michi" or the West Road may have plunged over the lip of Mount Fuji (conjuring images of Mordor), FX markets recent and abrupt weakness brought on by yet more printing (a topic we discussed in great detail recently as the chosen heretical method du decade) may well be coming face to face with reality.

We assume Azumi is faithfully watching these market moves but we wonder at what point the quasi-intentional weakening of local currencies flares into a full-blown currency war - and instead of merely encouraging simpleton FX-carry strategies chasing momentum and leverage - quickly becomes the hyperinflationary super nova that many have been waiting for over the last decade.

Dismal demographics aside, we wonder how long before Koo prescribes yet more of the same medicine for this constant state of deflation and at what point does inverted-Apple-looking charts for Trade and Current Account balances become simply too hot to handle...

The Japan trade balance has tipped into extreme freefall...

As has the Current Account balance...

And the absolute basis (purple line) between CDS and JGBs remains notably above any of its peers reflecting more of the possibility of a hyperinflationary or devaluation 'event' than Greece-like default given its currency-manufacturer status as opposed to its currency-user status (a la Greece)...

The basis (5Y 83bps) above is all the more shocking (almost triple the bond yield) when considered in relative terms - i.e. compared as a ratio to the extreme low yields of JGBs (5Y 29bps!! and 10Y charted below)...

so perhaps the recent 'crash' in USDJPY, catching up to FX vol risk-reversals (a measure of the FX options market's implicit skew to bullish or bearish sentiment) is the start of bigger things...

or is it simply yet another false alert on the road to Mordor for Japanese Central Bankers?

Peak Oil news

More glaring confirmation of Peak Oil. With no elasticity in the supply chain, any loss of any production, from anywhere is a threat because there is no swing production capacity anywhere.  The situation is further compounded by criminal market manipulations which are disguising real oil prices. Speculators make Peak Oil's effects worse while worsening shortages provide the impetus for bigger and bigger crimes. -- MCR

China, Japan scramble for oil as Sudan shuts fields

The shutdown in Sudanese oil supply could drive up already record premiums on spot crude markets as top Sudan customers China and Japan scramble for alternatives even as they weigh the impact on oil flows of international sanctions on Iran.

the Economic Times,

30 January, 2012

South Sudan has shut down its oil output, estimated at around 350,000 barrels per day (bpd), as it and neighbour Sudan row over how to disentangle their oil industries, borders and debt.

Before the shutdown, China imported most of that volume, bringing in around 260,000 bpd in 2011, according to Chinese customs data. That loss, in addition to cuts China has made in imports from Iran as Beijing and Tehran bicker over contract terms, has left China looking for alternatives equivalent to around 10 percent of its imports, or around 545,000 bpd.

"It will be a challenge to try to meet the shortfall in supply due to this sudden disruption as the overall quantity is not really that small," said Victor Shum, senior partner at oil consultancy Purvin & Gertz said. "Overall this is a tighter supply situation for Asian refiners."

The regional spot market is unlikely to provide much relief because of limited availability due to a spurt in demand from Japan for power generation after a devastating earthquake crippled nuclear facilities last year.

The supply disruption has added to the rally, boosting spot premiums for March to a record. It could drive prices even higher, although any rise may be tempered by refinery maintenance in the second quarter.

Sudan on Sunday released vessels loaded with South Sudanese oil, but has yet to agree to more exports from the terminal. The shutdown by South Sudan in protest has cut off supplies to equity holders China National Petroleum Corp (CNPC) , Malaysia's Petronas and India's Oil & Natural Gas Corp.

"We expect some disruption in loading schedules with the production shutdown," an official with one of the equity holders said. "We hope for a resolution soon."

The heavy sweet grades, Nile and Dar Blend, produced in South Sudan are preferred in Japan for power production and by Chinese refineries. They are often blended to reduce sulphur content in fuel oil, a residue output from refining crude and mostly used for running ships, for sale to power utilities in markets such as Japan and Taiwan.

CHINA'S ALTERNATIVES

Overall, the Asia-Pacific region is net short of crude as output from aging fields in Indonesia and Vietnam declines and as producers divert output to meet rising domestic demand. To make up for the loss from Iran, China has already been buying extra spot crude from Russia, West Africa, Middle East and also Vietnam in January and February.

"The disruption to crude imports from South Sudan has added to the reduction China has made in Iranian imports early in this year," Roy Jordan, London-based analyst from FACTS Global Energy said. "That means it will have to look to other exporters in the Middle East and Atlantic Basin for replacement crudes."

China has bought 10 percent more heavy sweet Angolan crude in March, pushing spot premiums for the highly acidic and heavy sweet Dalia, similar to Sudan's Dar Blend in quality, to a premium from a discount, a trader said.

Australian heavy sweet grades are a good substitute for Sudan, but exports typically fall during the cyclone season every first quarter. Cyclone Iggy disrupted output last week as producers shut several oil fields offshore Western Australia.

China's imports from Australia rose 42 percent in 2011 to 81,939 bpd, and gained 25 percent to 17,140 bpd from Vietnam. China's Unipec has increased spot imports of Russia's ESPO to three cargoes a month while it recently bought February Urals crude as the arbitrage window opened.

Compounding problems for China is Japan's additional demand for crude. The world's third-largest oil consumer has been regularly snapping up the bulk of medium to heavy sweet crude from Vietnam and Indonesia, leaving little for the spot market.

JAPANESE DEMAND

Alternatives Japan may be looking for include Gabon's Rabi Light crude and low-sulphur fuel oil, oil economist Osamu Fujisawa said. It has already started testing Rabi Blend, importing 600,000 to 1.2 million barrels a month from July.

Japan imported 48,847 bpd of Sudanese crude in the first 11 months of last year, up from 44,294 bpd in 2011. JX Nippon Oil & Energy and Mitsubishi Corp are the key importers. Sudan is the second-largest supplier of sweet crude to Japan after Indonesia. Japan burns the oil at power plants.

FACTS

Global Energy estimates Japanese crude purchases for use at power plants will be 200,000 to 300,000 bpd in the second quarter, rising from about 150,000 bpd now.

"Nile Blend is very popular for certain power plants in Japan as they form the baseload for thermal power generation," a trader with a Japanese firm said. "It would be tough to replace the crude as any change in quality could affect the machinery," he said.

Asia is importing record volumes of West African oil this year, rebuilding stocks after relatively low shipments in December, Reuters calculations showed. A drop in Brent's premium to Dubai to below $3 a barrel widened the arbitrage window, allowing more crude to flow from the Atlantic Basin to Asia.

"Overall, the Sudan volumes are not much in a global scale," said Natalie Roberston, an analyst at ANZ. "But they are adding to the overall sentiment in a market worried about supply disruptions."

Let's make it perfectly clear what's happening here. There is less and less oil to refine. refineries can only make money by refining... oil. Therefore those with the oil (i.e. the majors and sovereign owners) can literally dictate to refineries what they are willing to pay. Refineries are shutting down because oil companies are arm twisting for the lowest price in order to maximize profits.

It's the way money works. -- MCR

Europe’s refiners fall on hard times

By Sylvia Pfeifer and Guy Chazan

Financial Times,

30 Janaury, 2012

Refineries are strange beasts. Nationally strategic assets, they are nevertheless invisible to the general public until forecourts run out of petrol or diesel.

The collapse of Petroplus, Europe’s largest independent refiner by capacity and owner of among others the Coryton refinery in the UK, made front-page headlines amid fears of a fuel shortage but it is only the latest example of an industry fallen on hard times.

Overcapacity, shrinking margins and competition from Asia have conspired to prompt the current shake-out in which oil majors including BP, Royal Dutch Shell and France’s Total, have divested large chunks of their refining portfolio in a bid to focus on a smaller network of strategic plants and instead ploughed resources into more profitable operations such as exploration and production. Since 2009, Shell has reduced its global refining capacity by 15 per cent; in Europe, it has reduced it by 30 per cent over the same period.

The immediate outlook is for more pain. Analysts are already predicting that refining will be one of the weak spots during the upcoming earnings season for Europe’s oil majors.

“In terms of refining margins, the industry has hit rock bottom,” admits Volker Schultz, chief executive of Essar Oil UK, which runs the Stanlow refinery in Cheshire which was previously owned by Shell. “If these margins persist, it’ll force a lot of European refineries to close.”

It has been a slow decline. Most of Europe’s big refineries were built in the years after the second world war where the bias was towards petrol for cars and fuel oil for power generation. But in the past two decades, demand for middle distillates such as diesel and jet fuel began to increase, and soon exceeded the supply capacity of Europe’s refineries, increasing the continent’s import dependency.

This mismatch in demand and supply led to a steady decline. In the UK, for example, the number of refineries has fallen from 18 in the late 1970s to eight today. Since 1990, three have closed, the most recent in 2009, and of those that are left, two changed hands in 2011 and two are for sale, the latest being Petroplus’s Coryton. Total shelved plans to sell a fifth, Lindsey, after failing to find a buyer.

Andrew Owens, chief executive of Greenergy, an independent fuel supplier, says: “Older European refineries – with technology that could be 30-35 years old – typically have higher maintenance costs, higher sustaining capex costs and higher overhead costs than their newer bigger competitors in fast growth countries such as India.”

Europe’s refiners enjoyed a brief golden age in the mid-2000s, when China’s industrial boom fuelled a huge spurt in oil demand, while in the west tightening sulphur specifications for diesel pushed up prices for middle distillates, boosting refiners’ profits. Between 2004 and 2008, global surplus refining capacity fell by 3m-4m barrels, says one refining executive. Refining margins soared, reaching a peak of $10 per barrel in aggregate terms in 2007.

But the increased profitability triggered a new wave of investment in refining capacity. When in 2008/09, the global financial crisis hit, many of these new additions were just starting to come onstream. In the EU, refiners were also impacted by growing curbs on carbon emissions, the rising price of crude and competition from a new generation of “super-refineries” in Asia and the Middle East. Refining’s “golden nanosecond,” was over, says the industry executive.

In Europe today, “there is no strong demand for refined products, at a time when operating costs are high, carbon charges are rising and there is gross structural overcapacity,” says Francis Osborne, head of energy economics at KBC, a consultancy. “Many refiners are struggling to break even, let alone make a profit.”

Industry estimates suggest there are currently 6m barrels per day of surplus capacity globally. Demand growth, meanwhile, is a mere 1m-2m barrels per day per year – suggesting it will take two to three years to use up the surplus. To make matters worse, new capacity is coming onstream, notably in Asia and the former Soviet Union.

UBS analysts, in a note on the European refining sector titled “Hard Times”, already warned last November that a “further 4-5m barrels per day of capacity must close by 2015”. The added: “The further necessary readjustment is likely to be a painful process for the industry.”

Despite the gloom, there is room for optimism. James Zhang, commodity strategist at Standard Bank, argues the risk of foreclosure for other European refiners will come from problems they may have in terms of refinancing their debts rather than poor margins. Nor are all refineries created equal; proximity to transport infrastructure, for example, can provide protection.

New players are also entering the market, looking for a strategic foothold in Europe. India’s Essar Energy bought Stanlow, while PetroChina last year paid just over $1bn in cash for shares in trading and refining joint ventures with Ineos, including Scotland’s Grangemouth refinery and the Lavera refinery in France. Both refineries are geographically well positioned. Located on the Firth of Forth, Grangemouth, for example, has direct access to crude oil and gas from the North Sea.

The collapse of Petroplus could presage a broader and much-needed shake-out of the sector. Traders are among potential buyers for Petroplus’s assets. Gary Klesch, the American who owns a range of industrial assets including a German refinery he bought from Shell two years ago, is also seen as a possible buyer.

“There has to be attrition in the industry, and it’s more likely to happen now than it was before Petroplus went to the wall,” says Mr Osborne of KBC. “The strong will survive.”

The next 10 years...

From Richard Heinberg of the Post-Carbon Institute

The next 10 years will be very unlike the last 10 years

Time is running out

Peak Oil: Fuel shortages in North America and Asia

Diesel shortages continue in Western Canada

Diesel shortage could last for weeks

Fuel stations in Western Canada are still experiencing a fuel shortage, and it could be a while before resources are back to normal. The current shortage began about a month and a half ago, after an explosion at a Regina refinery, reducing its diesel production by 20 per cent.

Energetic City,

21 November, 2011

As a one-two hit to the industry, production at Suncor's refinery in Edmonton was slowed down by a third-party's hydrogen shortage. As a result, stations across the region started rationing fuel: some in Fort St. John as low as a 200 litre daily limit. Since then, Suncor spokesperson Sneh Seetal says that their hydrogen supply was replaced late last week, and the idle units are back in operation.

However, it will still take weeks for diesel supplies to return to normal, according to Ted Stoner, Vice-President of the Western Canada Division of the Canadian Petroleum Products Institute. He explains that during late fall and winter, supply and demand for diesel is already tight, and "wrinkles" like those in Regina and Edmonton "throw everything for a loop".

"It's going to take weeks before the inventory start to build up," he suspects, adding it will come back very gradually. That's all with the hope that nothing else goes wrong.

Although limits that were in place earlier this month have largely been removed, service stations in Fort St. John still say they are low on supply. UFA Petroleum says it isn't limiting customers, but is still only pumping diesel from 6 a.m. until 6 p.m. Co-op Petroleum still has a 300 litre limit for its cardholders. Both the Petro-Canada Bulk Plant and the Husky Oil Bulk Plant currently don't have a limit on diesel sales, but a representative at Husky says that if the shortage continues they're going to have to place restrictions.

STATE’S DIESEL RESERVES DOWN TO ONE WEEK

AFTER RUSSIA RECENTLY INCREASED THE PRICE OF ITS EXPORTED DIESEL FUEL, THE MONGOLIAN GOVERNMENT ELIMINATED ITS EXCISE TAX ON THE FUEL TO KEEP THE PRICE CONSUMERS PAY FROM GOING UP.

Our correspondent spoke with an official from the Mineral Resources and Petroleum Authority about fuel prices and the country’s fuel reserves. The official said that Russia has reduced its petroleum exports because of a domestic petroleum shortage. 

Mongolia imports 30,000 tons of diesel, 10,000 tons of 92 octane gasoline, and 10,000 tons 80 octane gasoline every month. 

If the amount imported from Russia is insufficient, the remainder will be imported from Latvia and Lithuania. 

The official added that the state has enough 80 octane gasoline in reserve to last 16 days, enough 92 octane gasoline for 15 days, and enough diesel for a week. The official said diesel imports have been reduced due to railroad transportation delays.

MONGOLIA IS FACING SEVERE GASOLINE SHORTAGES FROM RUSSIA

IS RUSSIA BLACKMAILING MONGOLIA?

Mad Mongolia

21 November, 2011

It is now over a month since the Diesel shortages have started in Mongolia, Russia claims that those shortages are due to their own supply problems and that this cannot be helped.

There seems to be no other proof or indication of why Russia would be having diesel shortages as production has remained unchanged and no new demand has come up. On the other side it also seems a bizarre coincidence that this fuel shortage comes as the Mongolian Parliament is set to announce the winners of the Tavan Tolgoi bid and Roscoft is negotiating a deal to install a 100 fuel station across the Mongolian territory.

At the time when Diesel shortages have started to appear across Mongolia, the Mongolian Government has assured the people that shortages will not impact the supply of A-92 Fuel across the country yet we have recently seen signs that supply of A-92 Fuel has started being constrained. 

Limited fuel vouchers for the fuel were being issued yesterday while some petrol stations now only serve regular customers who carry loyalty cards and do not accept new customers. Further to this, a black market supply of fuel has started on street side stands where people are now selling bottles of petrol and diesel for a 50% margin on normal fuel prices.

The ministry of transport has warned that the supply of fuel might be unstable up to next September.

As a background to this situation, Russia has yet again pulled out its trump card of supposed “unpaid debts” remaining from the subsidies Mongolia received during the Soviet days. Mongolia denies the debt or rather the enormous size of it but it is still a strong argument in favour of Russia.

The question of course on every one’s mind is “will the Mongolian government cave in and be subjected to Russia’s blackmail or will they be able to retain the upper hand.

Winter woes: Tempers soar as gas runs low in Rawalpindi

RAWALPINDI: 

Many areas in the city remained without natural gas supply for hours in the morning on Sunday. The supply was not resumed till late in the afternoon.

the Express Tribune,

21 November, 2011

Besides domestic users, commuters continued to suffer in the absence of Compressed Natural Gas (CNG) for the fourth consecutive day.

The CNG filling stations could not open up because of the low pressure of natural gas.

The supply of gas could not be resumed to the domestic users till as late as 3pm in some areas.

“I had to get a cylinder [of Liquefied Petroleum Gas (LPG)] refilled to prepare breakfast for my family. My children had to wait, as I refilled the cylinder for Rs1,500,” said Hadayat Ahmed, a resident of Quaid-i-Azam Colony, near Army Aviation Base in Dhamial.

The gas was also in short supply in the suburban areas, where people used wood as fuel.

“We are thinking of buying LPG cylinders or collecting woods for fuel. One needs fuel to survive,” said Muhammad Awais, who lives at Asghar Mall scheme.

Anger reigned high among the residents, who said the long power outages in summer had been replaced with acute gas shortage in winter.

The worst hit were the commuters and public transporters as the CNG stations were allowed to sell the gas, but were not supplied with the commodity.

According to the load management plan for gas, the CNG stations in Islamabad and Rawalpindi region close up on Thursday morning

and the supply is resumed on Saturday evening every week.

But Sunday saw people waiting for hours as the gas pressure was too low in the morning and afternoon for the cars to be refuelled.

India: Coal supply shortage may further trip industrial growth numbers

Business Standard
21 November, 2011

An examination of three broad categories in the otherwise dismal two-year low industrial growth of 1.9 per cent in September will show one silver lining: electricity. But, crucially, that month also saw a 17 per cent decline in the contracting coal output. Now, that shows a potential to dampen the growth of this crucial sector in the coming months, according to analysts.

However, National Thermal Power Corporation (NTPC) maintains it does not see any deficit in coal supply. For, the country’s largest company in the electricity sector has its domestic and imported requirements tied up for a year.

Analysts, on the other hand, caution that if domestic coal supplies do not improve significantly, the impact may be felt in the form of forward linkage in electricity and manufacturing in the coming months.

Coal contracted 17.8 per cent in September year-on-year on top of a 15 per cent decline in August.

In fact from April-September, it has grown only by a just 2.5 per cent year-on-year. For, flooding of mines, bandhs and strikes pulled down coal supplies from the two main coal companies — Kolkata-headquartered Coal India Limited and Singareni Collieries in Andhra Pradesh.

Economists argue that the vigorous electricity numbers till September will not be as promising in the coming months since the effect of coal shortage comes with a lag effect. Electricity generation grew by 9.4 per cent in the first six months, against a meagre 3.8 per cent in the corresponding period last financial year.

Kuljit

For article GO HERE

Crude oil above $100

The reason is called “Peak Oil”

Globe and Mail,

15 November, 2011

Based on the price of oil, you wouldn't know that the global economy is being threatened by the European debt crisis, a slowdown in China and rising odds that the United States is slipping into recession. 

West Texas Intermediate crude oil surged above $100 (U.S.) a barrel on Wednesday morning, crossing the triple-digit threshold for the first time since July. Later in the day, the December contract for U.S. crude, which expires on Friday, settled at $102.59, up $3.22, after jumping to a session high $102.89, the loftiest intraday price since June 1

The gain means that oil has completely recovered from the steep slide endured during the summer and early autumn, when investors grew alarmed over the potential for Europe's sovereign-debt crisis to spill beyond Greece and affect a big part of the global economy. Those fears certainly haven't subsided since then -- and indeed, rising bond yields in Italy and France suggest that they have intensified.

For article GO HERE

Hubbert's Third Prophecy

There is an excellent article on Dmitry Orlov's blog on Hubbert's third prophecy.

To see the whole article GO HERE

In light of recent events such as the Arab Spring and Occupy Wall Street I thought it would be pertinent to review Hubbert's Third Prophecy about the cultural crisis he expected.   

He wrote about it in the attached article entitled "Exponential Growth as a Transient Phenomenon in Human History". In case you are not familiar with Hubbert's first two prophecies, he predicted both the US and world oil peak very accurately.

Consequences of conflict with Iran

Let us all pray that this does not eventuate - it would be a suicidal action.

Oil at $300 or $500 per Barrel If Israel Attacks Iran

Peak Oil,

8 November, 2011

Brent crude futures are up $1.17 a barrel to $115.73 on continued word that Israel may go it alone and bomb Iran’s nuclear facilities. It is their highest level in nearly two months.

But it would be nothing compared to the cost if Israel attacks. In 2006, as Israel and the U.S. began to rattle sabers over Iran’s nuclear program, Iran’s Revolutionary Guards deployed bottom-tethered mines in the Strait of Hormuz, according to a defector.

“The plan is to stop trade,” the source told Newsmax. One third of the world’s oil passes through the Strait of Hormuz.

The deployment was mentioned in a plan produced by the Strategic Studies Center of the Iranian Navy in 2005. It also called for a single operational headquarters integrated with Revolutionary Guards missile units, strike aircraft, surface and underwater naval vessels, Chinese-supplied C-801 and C-802 anti-shipping missiles, mines, and coastal artillery, according to the intelligence office of the Ministry of Defense in Iran.

Revolutionary Guards missile units have identified “more than 100 targets, including Saudi oil production and oil export centers,” the defector said. “They have more than 45 to 50 Shahab-3 and Shahab-4 missiles ready for shooting” against those targets and against Israel, he added.

The CIA, however, dismissed the source, Hamid Reza Zakeri, as a fabricator. In addition to the array of weapons above, Zakeri said Iran will use biological and nuclear weapons if attacked.

In 2009, Iran tested a new generation of missiles, including the Fateh-110, a short-range ground-to-ground missile, and Tondar-69, a short-range naval missile.

Israel takes the possibility of Iranian retaliatory strikes seriously. Last week it staged a drill simulating a missile attack in the center of the country. Thursday’s simulation involved various Israeli emergency services, with ambulance workers and soldiers, some wearing masks and equipment to protect against chemical weapons, practicing treating the wounded, according to Reuters.

On November 1, a group of 13 generals and admirals produced a report warning that a “sustained disruption” of oil “would be devastating – crippling our very freedom of movement.”

The report, entitled “Ensuring America’s Freedom of Movement: A National Security Imperative to Reduce U.S. Oil Dependence,” was sponsored by a San Francisco-based Energy Foundation.

“Under a worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds that the U.S. would lose nearly $75 billion in GDP,” reports National Defense Magazine.

Last week, the Rapidan Group predicted oil prices over $175 per barrel if Iran is attacked. According to a survey conducted by the group of oil industry specialists, oil prices would rise on average by 23% in the first hours of the attack.

Arnaud de Borchgrave, writing for the UPI, suggests the price of oil would go much higher. “One bomb on Iran and oil prices could shoot up to $300 or even $500 a barrel,” he writes. “The Strait of Hormuz, between Oman and Iran, is the world’s most important oil cPeak Oilhokepoint with a daily oil flow of 16 million barrels, roughly 33 percent of all seaborne traded oil, or 17 percent of oil traded worldwide.”

“While many experts in the market believe that a war on Iran would send oil prices soaring high between, at least, $200 and $300 for each barrel, the most optimistic analysis of the impact on oil markets of an Israeli attack on Iran and the subsequent closure of the Strait of Hormuz said oil prices could spike by as much as $175/bbl,” reports the Fars News Agency, Iran’s official news outlet.

The World After Industrial Civilization Goes

by Depraver Jan Lundberg

Culture Change,

20 October, 2011

Author Keith Farnish has a problem with Western Civilization. So do I. I mean, Mozart is all well and good, but destroying the planet through industrialism and growth isn't quite worth civilization's accomplishments. Or is extinction a small price to pay for our glorious expansion? The downsides are hard-wired to the dominant culture.

Even if sustainability were not a critical issue, for anyone to have to pay to live on Earth is a ridiculous notion for a society to undertake. But this is our brilliant system, whereby people are conditioned to compete and buy into their own slavery. Abandoning nature in order to have to buy pieces of it as commodities is inefficiency and waste of the tallest order. Modern man is demonstrably stupid to rely on unnecessary slavery, whereas any animal smart enough to survive in the wild cannot be stupid and is no kind of slave.

One form of human enslavement is to tolerate massive pollution, such as the sum of greenhouse gas output from the technological giants China and the U.S. One can surmise that those of us who sit by and do not lift a finger lack a "survival gene" in our evolutionarily strange times.

Keith asked me, in the spirit of co-liberation for humanity and the species we have enslaved, to furnish a chapter to his upcoming book Underminers: A Practical Guide for Radical Change. Upon reading the introduction he wrote, I'm in support of the project. Here's what he got from me in early October of this year:

The World After Industrial Civilization Goes

Usher in the "new" economics of local self-sufficiency and community cooperation

Imagine no possessions

I wonder if you can

No need for greed or hunger 

A brotherhood of man*

 - Imagine, John Lennon

*Lest any feminists be offended by the quaintness of the last line, it is worth recalling that Lennon was soon to unleash "Woman is the Nigger of the World."

I like to think that critics of civilization are above all compassionate, nonviolent and realistic.  So perhaps we can keep in mind that wishing for quick change to save the planet and throw off the shackles of capitalism and authoritarianism has to be weighed with today's vast dependence on industry.  Yes, the economy will collapse and end most greenhouse gas emissions. But this is not to say everything will be just fine as soon as manufacturing and oil-powered transport stop. There will be severe repercussions to "lifelines" of energy, food and materials being cut or terminated. 

As industrial civilization is built on exploiting nonrenewable "resources" (many of which should never have been tapped), and human population and consumption of manufactured materials are near peak, the unsustainability of unlimited industrialism should be obvious.

Whether the unsustainability is obvious or not, collapse can be sudden and rapid, as the house-of-cards economy built on cheap, ample petroleum can have the rug pulled out from under it by any break in the chain. Then the infrastructure fails once and for all, beginning the final rusting of the machinery of civilization on all levels.

One can say today, while we still enjoy vast quantities of food shipped great distances, "That's fine, the Earth needs a break."  But population die-off has two versions: simple starvation that can be overcome after petrocollapse, or species extinction due to weakening of the gene pool and assaults from nuclear events, disease, and climate destabilization.

If we have simple starvation, and can survive the other assaults, then we can paint a picture of the world after industrial civilization that has a viable human presence.  I am optimistic about it.  A new culture borrowing heavily on traditional ways of various indigenous cultures, with some helpful influences from recent visionaries, will emerge from the rubble of petrocivilization.  The breakdown of the previous global corporate culture and lack of cheap, fast travel will assure a larger world of innumerable autonomous bioregional nations and tribes.  

Individually the end of industrial civilization and massive government means being free from jobs, i.e., working for others for their purposes to earn money to buy essentials that nature actually provides freely.  This is unthinkable by many today, but they tend to distrust the masses' thinking for themselves and managing with self-rule and voluntary cooperation.

Along with rejecting the obvious failures and mistakes of the previous era of growth and "progress," the new culture will have to find harmony with nature.  This cannot be done with the hierarchal, patriarchal, religious empire-building mindset that ravaged the planet starting with perhaps Sumer.  Therefore the new culture will feature equality, justice, mutual aid, and will refrain from building surpluses for grandiose schemes of expansion or greed.  

As to nuts & bolts, or the lack of them, I wrote in January of 2007 in Culture Change Letter #150, "one can visualize local crafts-people soon making due with scrap materials and some renewable resources. The individual's possessions will not be so voluminous and overbearing when the change comes. There will no longer be a great number of things used daily, because new stuff won't be available and cheaply shipped to everyone the way it once was. So, re-using finally becomes the rule of the day."  

However, maximizing bicycles and bike-trailers may be a transition phenomenon that lasts only a century at best.  This may not be so terrible: as we become less material oriented we become more spiritual.  It can be argued that nature and spirit are really one.  If a "primitive" and simple life for all sounds objectionable, tough shit.  The question is "what is really ahead?", not what we feel we are entitled to as modern homo "sapiens."  As part of the swing of the pendulum, spirituality identified with the Earth will return strongly, as people revere life in part by deploring the past era's trashing of the living world.

As certain regions will be damaged for centuries by past practices and the distortions of climate change, they cannot provide every essential food or material for sustaining the lives or happiness of the tribe or nation, if isolated.  So trade will be perhaps essential.  Without cheap oil, and in the absence of renewable fuels such as biofuels that still depend on mechanical systems involving high entropy, the low-tech, efficient mode of sailing will return to the fore.  Already it is making itself attractive in a cost sense as the corporate global economy continues to pollute the atmosphere with disastrous bunker fuel and routine oil spills out of view of the news media and public consciousness.

People in temperate and arctic climes can live without coffee, chocolate, and other delicacies now shipped thousands of miles to addicts and bon vivants.  But people prefer not to be deprived: if something can be done, it will be done.  Additionally, a favorable environment here for producing olives, for example, can result in a reasonable surplus to trade for some grain from over there.  Specialization is a questionable reliance, but sharing and assisting other communities will be carried out between peoples who, since the Great Collapse, will be evolving their bioregions into very diverse, unique cultures.  The loss of languages and cultures will be remedied over time.  Sailing will keep up the right level of communication, knowledge, and mutual aid, for the new reduced population size.

That's if we can survive the undoing of civilization and its toxic and radioactive consequences.

- Depaver Jan Lundberg, independent oil industry analyst

Monterey Bay, California, October 8, 2011

Colbert Report Interview: James Howard Kunstler on Resource Depletion and Supply Chain Management

This great interview with Jim Kunstler was done back in 2008.

The Colbert Report
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The world is going to find 53% more energy?!

Global energy use to jump 53%

Another piece of total nonsense.  I will leave it to Michael Ruppert to consign it to the rubblish bin - I'm speechless.

“Here is an obvious demonstration of the stupidity and deluded state of the Old Paradigm. 

Using other mainstream news, scientific and governmental sources (at an astonishing depth) we know that Peak Oil has arrived and we're looking at a 9% annual decline rate; we know that we have passed Peak Coal and there is no such thing as clean coal; we know that conventional natural gas has fallen off a cliff and that fracking is absolutely deadly with a likely negative-net energy return; we know that renewables are being destroyed by the way money works; and we know that nuclear is on its way out. 

The brazenness and desperation of this leaves me... lmao.

There are still some who believe a friendly group of aliens will show up just in the nick of time. There are also some who believe there's a secret energy source that will plug into a billion oil-powered engines, just in the nick of time... The rest of us are getting ready”. -- MCR

NEW YORK (CNNMoney) -- Global energy use is expected to jump 53% by 2035, largely driven by strong demand from places like India and China, according to a report Monday.

Combined, developing nations currently use slightly more energy than those in the developed world, according to the U.S. government's Energy Information Administration. By 2035, they are expected to use double.

"Concerns about fiscal sustainability and financial turbulence suggest that economic recovery in the [developed] countries will not be accompanied by the higher growth rates associated with past recoveries," the report said. "In contrast, growth remains high in many emerging economies, in part driven by strong capital inflows and high commodity prices."

The 53% rise is slightly more than the 49% increase the agency predicted in last year's report.

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Accompanying the surge in energy use is a correspondingly large jump in greenhouse gas emissions. EIA sees energy-related carbon dioxide emissions rising 43% by 2035.

The projections, in the agency's 2011 International Energy Outlook, are based on current policies. They could change substantially if countries like the United States and China passed stronger laws restricting carbon dioxide emissions.

Higher or lower energy price projections can also influence the report's findings.

EIA assumed slightly lower oil prices in calculating this year's report. The agency predicts oil prices to reach $108 per barrel in 2020 and $125 per barrel in 2035.

Last year EIA thought oil would be at $133 a barrel by 2035. EIA's numbers do not include price increases attributed to the normal rise in inflation.

Fossil fuels will continue to be the dominant fuel choice in 2035, the agency predicts, with renewables constituting just 14% to the world's overall energy consumption.

But that's a substantial jump from renewable energy consumption in 2008, which stood at 10%. That growth rate makes renewables the fastest growing of all the energy sources, the report said.

The agency noted that most future renewable energy supply will continue to come from wind and hydropower. It did not include biofuels like ethanol as part of its renewable catalog, instead lumping it in with liquid fuels like oil.

EIA does not expect solar power to become a significant energy source by 2035. That runs counter to the opinion of solar power supporters who foresee rapidly declining prices for solar panels in the coming years.

The agency predicts nuclear power will go from about 5% of overall energy consumption in 2008 to about 7% in 2035. The vast majority of new nuclear plants are expected to be built in China. EIA did not factor in how last year's nuclear disaster in Japan might impact nuclear power plant construction.

Natural gas continues to make up nearly a quarter of the world's energy consumption, driven by increasing development of shale gas.

EIA projections for natural gas use by 2035 are 8% higher in this year's report compared to last year's, largely due to shale gas development.

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Natural gas from shale, which is found in a different type of rock than most previous natural gas developments, has grown rapidly in recent years thanks to new drilling and extracting technology.

The technology involves cracking the shale rock with pressurized, water, sand and chemicals -- a process knows as hydraulic fracturing, for "fracking" for short.

But the process has many people concerned over its effects on the groundwater, and shale gas development has been put on hold or stopped in some locations.

Despite the concerns, EIA predicts shale gas and other unconventional forms of natural gas will make up three quarters of U.S. natural gas production by 2035, up from about half today. Similar patterns are expected in China and Canada.