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Where will Peak Oil hurt the most?

by Migeru Mon May 26th, 2008 at 06:04:37 PM EST

In yesterday's open thread, Francois in Paris wrote

Developing countries have historically a much larger demand elasticity than developed countries and likely still have [but] don't see it as a superior "virtue" that "poor, frugal countries" would hold against "rich, wasteful countries". It doesn't mean that poor countries are more adaptable to high oil prices, quite the contrary.

It means that they are far more dependent on oil, oil purchases representing a much larger share of their GDP, and that, as a consequence, prices have a much larger effect on their activity, a rise creating a much larger demand destruction aka recession. They don't have a output "surplus" they can reallocate to oil purchases that would allow them to weather a price increase for a long time while they switch to other sources by infrastructure changes as developed countries can do.

If oil prices stay high, we must expect a very, very deep recession in the bottom half of the world economic ladder. We'll hurt too but it'll be nothing compared to them.

This is related to a discussion I was having with kcurie the other day off-site, in which I was wondering about where the immediate impact of Peak Oil would be strongest. My impression was that the countries now undergoing a strong bout of oil-fuelled industrialization should be the ones most vulnerable to an oil shock, because of the disproportionate fraction of GDP taken up by oil imports. This would include most countries in South-East Asia. I noted the fact that recently Indonesia announced its intention to quit OPEC as it is becoming a net oil importer. On the other hand, China is known to be swimming in currency reserves, and so could buy oil in the international markets if necessary (which would drive prices up for everyone, including them, but at least initially they could buy their way out of a pinch).

But this is the kind of question that cannot be answered from first principles and where received ideas about various countries' economic structure can be dangerously misleading, especially as they get out of date and out of line with the evolving reality. So, I got ahold of the IEA's 2007 key statistics [PDF] (2005 data), imported the summary table at the end of the document into R, and made supplemented them with Wikipedia's data on world currency reserves (2007-8 data from the IMF). The result is in three charts, below the fold, with some unexpected conclusions.


The first chart is a log-log plot of net energy imports against GDP. I have added a line representing direct proportionality between the two variables at a level where only a few countries are left above it:

Apart from two microstates (Gibraltar and NL Antilles), the four most vulnerable countries by this measure - in the sense that an oil price increase will eat a larger fraction of their GDP - are all former soviet republics without indigenous energy resources. JakeS wisely warns:

Now, as anyone who has ever played poker will know, being on the unfortunate end of the statistical noise can be rather painful, so in that sense that observation is relevant. But I think that there are more convincing arguments to be made than a bad roll of the demographic dice, if we want to draw geopolitical conclusions.
So, the next step is looking at countries' currency reserves to see how much oil they can buy in the international markets in a pinch. The result is

We see one country from the Horn of Africa, a number of countries from the EU15 (Italy and Germany are not far below that dotted line), the USA, and again Belarus and Tayikistan. These are countries with precious little in the way of currency reseves that they can bring to bear to buy oil. However, at least for the EU15 and the USA, oil does not represent a huge fraction of GDP. However, Belarus and Tajikistan are vulnerable on both counts. As for Eritrea, it's an example of a poor country which cannot afford to buy more oil with its reserves, but as it is barely industrialised it doesn't have much use for oil either.

Finally, I divide by net imports throughout (thus removing from the data set the "size of the economy", which is the main direction of spead of the points in the previous two charts) and I plot the two ratios measuring vulnerability and reserve cushion against each other, with the following result.

I plot import dependence (defined as the ratio of net oil imports to GDP) and reserve cushion (defined as the ratio of currency reserves to net oil imports). I have removed the axes since the units are complicated ratios.

The upper-left corner contains countries spending an unusually large fraction of GDP on energy imports, and having relatively small currency reserves. These countries are not only exposed to the higher oil price risk but also don't have the hard currency to buy oil in the open market in an emergency. This category includes Moldova, Tajikistan, Eritrea and Luxembourg.

At the opposite end of the spectrum are countries with a relatively small fraction of GDP spent on energy imports, as well as relatively high currency reserves. These countries not only have a low economic exposure to oil prices but they have the reserves to shield the blow if necessary. This category includes China, Peru, Brazil and the UK (though I think since 2005 the UK has become more dependent on oil imports because of the decline in Scottish North Sea production, so it has moved up in the chart).

My tentative conclusions are as follows:

  • China is unexpectedly well placed to withstand the coming oil price shock, both in terms of the GDP impact of oil prices and the availability of foreign reserves. The US and Europe will be forced to change course before China. However, see Jerome's latest High oil prices causing oil companies to go bankrupt featuring cash-strapped Chinese and Indian oil refiners.
  • The group of nations that seems most vulnerable is that of former Soviet Republics without developed energy resources. In particular Belarus and Tajikistan, but all the way to Georgia and Armenia (among the Caucasian republics Azerbaijan actually is a net exporter). In the meantime, Russia is a net exporter, has built its foreign reserves and had increased its GDP substantially. It looks as if events might give Russia a lot of leverage in its old sphere of influence.

Apart from an unenviable political and human rights situation, Tajikistan seems to be hurting already:
After independence, Tajikistan suffered from a devastating civil war which lasted from 1992 to 1997. Since the end of the war, newly-established political stability and foreign aid have allowed the country's economy to grow. Its natural resources such as cotton and aluminium have contributed greatly to this steady improvement, although observers have characterized the country as having few natural resources besides hydroelectric power and its strategic location.

...

In 2008, the harshest winter in a quarter century caused financial losses of $850 million. Russia pledged $1 billion in aid.[8] Saudi Arabia sent about 10 planes carrying 80 tons of relief and emergency supplies in February and another 11 tons in March. (wikipedia)

As for Belarus, it should be a concern to all of Europe as it is the only country not in the Council of Europe, with again a dubious human rights record and little political freedom. It would seem that merging back into Russia would be an improvement, as much as it would give a hissy fit to other former Soviet Republics such as Ukraine or Georgia or to Poland, which is a neighbour of Belarus to the West.

This should of course all be taken with a grain of salt, based as it is on very few and very coarse economic indicators. As ThatBritGuy put it yesterday:

[The impact] would depend on how essential the industrialisation is.
Also, I wouldn't expect it to be a linear relationship. Beyond a certain point essential services stop working, so catastrophic social failure is more likely than linear degradation.
...
So a more realistic model would look at critical paths in the economy, rather than GDP as a whole.
I'd guess that's going to reveal some essential dependencies which aren't being considered seriously yet.
I guess what I would say is that I am considering a linear measure not of the effect (which, indeed, is nonlinear and probably involves a catastrophic transition point) but a measure of the stresses. And, of course, I would love to have more fine-grained data about what economic sectors each country uses its oil for.

Display:
Please poke holes at will.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Mon May 26th, 2008 at 06:11:45 PM EST
Not to worry.  Once we get past the idiot caribou and start drilling in ANWR, there'll be a shower of ponies the likes of which we haven't seen since Reagan defeated the Communists without firing a shot.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon May 26th, 2008 at 11:51:57 PM EST
[ Parent ]
Its not like currency reserves are the main determinant of an ongoing ability to finance imports of oil ... for one thing, currency reserves are an accumulated stock, while the oil is a flow ... it is by and large consumed and gone.

Currency reserves may be important for a soft currency country worried about whether it can ride out a short term oil price spike, but its not an indication of ability to cope with ongoing high and rising oil prices.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue May 27th, 2008 at 10:40:26 AM EST
[ Parent ]
Right, but if all I am trying to look at is the immediate effects of peak oil, are currency reserves relevant?

And what would be the proper indicator of the ability to cope with ongoing rising prices?

Anyway, the fact that China's reserves can buy 10 years' worth of its energy imports at current oil prices has to count for something.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 07:26:30 PM EST
[ Parent ]
Imagine what USD would look like if the PRC did this....

The Hun is always either at your throat or at your feet. Winston Churchill
by r------ on Tue May 27th, 2008 at 07:33:54 PM EST
[ Parent ]
I'm not saying they're going to buy 10 years' worth of their energy in 10 months - just that if it comes to that they would seem to be well-placed to continue increasing their energy use at the current rate for a while...

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Wed May 28th, 2008 at 02:22:29 AM EST
[ Parent ]
China's currency reserves can only buy 10 years of Chinese oil imports if China does not try to use them to buy large amounts of oil ... if it were to do so, the value of the US dollar would crash, and with it would go the crude-oil purchasing power of its foreign exchange reserves.

Those foreign exchange reserves are not savings, they are a side-effect of policies to discount the yuan/renminbi. And that is the real key to the extra degree of freedom that the Chinese have in facing an oil price shock ... since they are forcing the buying power of their currency down now, they are free to permit the value of their currency to rise if they find that the benefits of a cheap yuan policy are outweighed by the problems caused by energy price inflation.

Its not easy trying to find a capability for response to changing conditions in configurations of values in the various external accounts and publicly available trade figures, because those are values from the systems operating under current conditions, and two economies could well function in a very similar way under current conditions, but still have quite different capacities to cope with a particular kind of financial stress.

Now, one good measure of one particular vulnerability to an oil price shock is foreign debt denominated in terms of foreign currency ... this was what hammered the Brazilians in the first oil price crisis.

But as far as a general measure ... I'd have to cogitate on that. Plus also read what other people are saying, of course ... the more grist for the mill, the better it works.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue May 27th, 2008 at 07:50:33 PM EST
[ Parent ]
China's currency reserves can only buy 10 years of Chinese oil imports if China does not try to use them to buy large amounts of oil ... if it were to do so, the value of the US dollar would crash, and with it would go the crude-oil purchasing power of its foreign exchange reserves.

Now here's an interesting question. Suppose China wants to continue increasing their energy use at a few percent per year, using its currency reserves if necessary. How fast and how high and in how much time would the price of oil go, and who else would be deprived of that oil given that global supply has peakedis in an undulating plateau?

What data do I need for that? Total energy use (or domestic production) as well as imports, but how about the demand elasticity of the oil price?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Wed May 28th, 2008 at 02:27:32 AM EST
[ Parent ]
Simply slowing down its accumulation of currency reserves will increase the value of the yuan at a moderate pace.

But its a balancing act, because allowing the value of the yuan to rise too far, too fast will undermine the position of Chinese exporters in overseas markets and cut into China's current account surplus, and China requires those exports in order to purchase a wide range of commodity inputs ... not just oil, but iron ore, natural gas, coal, aluminum, concrete, etc., etc.

"Spending its foreign exchange reserves" is reasoning as if foreign exchange reserves are a dragon's treasure in a cave, somewhere. That is, as if the FX reserves are something that is intrinsically valuable in its own right, as opposed to a standing future monetary claim on future international income flows.

"Spending from Foreign Currency Reserves" implies a massive change in China's FXR policy ... that is, something like a doubling of value of the (indirect) FXR of the yuan/renminbi, going on a rough, back of the envelope reckoning that the yuan/renminbi is at something like 1/4 of its purchasing power parity value, and if it were to operate under a dirty float it would be more like 1/2 of its PPP value.

You are using "spending a bit out of FXR" as if it is an incremental change from the current FX rate policy stance, when the incremental change is to ease up on the steep discount of the yuan renminbi by not accumulating Foreign Exchange reserves at quite the same rate.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed May 28th, 2008 at 01:48:02 PM EST
[ Parent ]
My grasp of the national accounts is small to nonexistent. I guess what you're trying to say is that the trade balance is a better comparison variable than currency reserves.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2008 at 04:08:13 AM EST
[ Parent ]
BruceMcF:
Currency reserves may be important for a soft currency country worried about whether it can ride out a short term oil price spike
You mention soft currency. Does that mean that the US, EU or Japan would be expected to have relatively small reserves because they are hard currency areas?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Wed May 28th, 2008 at 11:48:37 AM EST
[ Parent ]
The US, EU and Japan are going to have relatively small reserves because they are pursuing a dirty float rather than a policy of trying to steeply discount their currencies against trading partners.

IOW, you get large currency reserves as a side-effect of pursuing the neo-mercantalist policy of discounting the cost of your domestic resources in overseas markets by depressing your currency exchange rate.

The US, EU and Japan can't do that, because their's are the currencies that the neo-mercantalists are targeting. Its not possible for everyone to depress the value of their Foreign Exchange Rate against everyone else, because the FXR of currency B against current A is the inverse of the FXR of currency A against currency B.

A more useful 2-way breakdown would be net energy imports as a percentage of total current account inflows excluding energy exports, and current account outflows excluding energy imports as a percentage of total current account inflows excluding energy exports.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed May 28th, 2008 at 01:55:43 PM EST
[ Parent ]
BruceMcF:
The US, EU and Japan can't do that, because their's are the currencies that the neo-mercantalists are targeting.

Surely Japan is doing it?
by generic on Wed May 28th, 2008 at 02:43:23 PM EST
[ Parent ]
No, of course not.

Why surely?

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed May 28th, 2008 at 10:45:51 PM EST
[ Parent ]
Because Japan is holding a Trillion Dollar? Although granted Japan's reserves did not grow particularily fast last year so Japan's currency manipulation may well be a thing of the past.

And then there is this:
How Japan financed global reflation

In 2003 and the first quarter of 2004, Japan carried out a remarkable experiment in monetary policy ? remarkable in the impact it had on the global economy and equally remarkable in that it went almost entirely unnoticed in the financial press. Over those 15 months, monetary authorities in Japan created ¥35 trillion.

[...]

The Bank of Japan gave the ¥35 trillion to the Japanese Ministry of Finance in exchange for MOF debt with virtually no yield; and the MOF used the money to buy approximately $320 billion from the private sector. The MOF then invested those dollars into US dollar- denominated debt instruments such as government bonds and agency debt in order to earn a return.

by generic on Thu May 29th, 2008 at 02:08:02 AM EST
[ Parent ]
But in 2007, the Yen was over purchasing power parity, so the idea that the Japanese are deliberately discounting their currency against both the US$ and Euro doesn't stand up to scrutiny.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu May 29th, 2008 at 07:00:21 AM EST
[ Parent ]
I agree, but at least discounting the Yen against the $ is not unprecedented.
by generic on Thu May 29th, 2008 at 03:56:28 PM EST
[ Parent ]
Yes, certainly at one time the Japanese pursued a discounted FXR policy ... but that was years back.

Of course when the Japanese adopted a full accommodation monetary policy stance in the 90's, that resulted in a lower Yen (indirect) FXR, but that the way floating exchange rates are expected to work when a country has a sluggish economy and adopts a loose monetary policy.

Mind you, Japanese corporations went through a structural transition in the imported/domestic composition of their exports during the 1990's ... a major factor in the sluggish domestic economy in the 1990's ... so I guess someone could argue that they are embedding the neo-mercantalist monetary policy embedded in the Chinese and Southeast Asian into their exports via the imported component of their exports.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 29th, 2008 at 06:56:00 PM EST
[ Parent ]
But the Japanese are much more flexible than their regional competitors for the simple reason that they own and co-own manufacturing facilities within many of their largest trading partners - the U.S. in particular. Taiwan has some similar endeavors, but nothing on the scale of the Japanese penetration.

Upshot is that they can - and do, as I can state from personal experience - make manufacturing/import/export decisions based on their analysis of the mid-term, relative financial trends between their domestic economies and those of their 'clients'.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Fri May 30th, 2008 at 02:23:39 AM EST
[ Parent ]
The infamous Yen carry trade?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 03:21:56 PM EST
[ Parent ]
One factor which is hard to quantify but which I think will be of some importance is the willingness and ability of the various regional powers that be to subsidise (or outright hand out) energy to countries in their sphere of influence (or countries that they want to be in their sphere of influence).

For instance, even though it might look like the Caucasian countries are in a pretty bad shape, it is not impossible that Russia might consider it a good deal to prevent them from collapsing altogether (at least if they behave themselves and get back into Moscow's sphere of interest). If for no other reason then in order to avoid having two thousand km of Chechnya-look-alikes on their Southern border. This could be modeled after the situation that obtained in Eastern Europe before the Colour Revolutions, so it is not entirely unprecedented.

At the other end of the spectrum, I expect things to be harder on some of the Latin American countries than a naïve look at the figures would suggest, because the only major power in the region at the moment - the Big Neighbour to the North - is all but openly hostile to a lot of those countries. Unless Venezuela can bail them out, of course.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon May 26th, 2008 at 06:22:01 PM EST
I think it is very much in the interest of the EU to shore up the former Soviet republics, not so much out of concern for the possibility that they may fall back under Russian control, but because of the potential for internal unrest. Belarus should be of particular concern, but also obviously Moldava, Ukraine, Armenia dn Georgia.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Mon May 26th, 2008 at 06:40:45 PM EST
[ Parent ]
Venezuela can't, at least not without seriously hurting itself which would presumably hurt Chavez' domestic popularity. Its production is down, its consumption is up (courtesy of very heavily subsidized oil prices). And it's current aid program of at cost supply of 80,000 bd to Cuba, 30,000 bd to Nicaragua plus smaller amounts of politically motivated aid is already a significant expense -  more than the US spends on Iraq plus Afghanistan as a percentage of GDP.  On the other hand, the two biggest Latin American economies, Brazil and Mexico, don't import oil. Note that for Nicaragua this subsidy is absolutely huge as a percentage of GDP - $100x30kx365 = just over a billion dollars a year or almost one fifth of its 2006 GDP.
by MarekNYC on Mon May 26th, 2008 at 08:27:10 PM EST
[ Parent ]
Mexico

Yet.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 12:28:26 AM EST
[ Parent ]
Mexico is going the way of Indonesia, and Brazil doesn't import oil because in the 1970's it made a national push to ethanol.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2008 at 04:06:28 AM EST
[ Parent ]
I think you have a good first order picture there for how countries will weather the front shockwave.

Some things I see missing for the longer term:

  • Expectation of growth and effect on social stability.
  • Comparative structures of economies and established practices. CAPEX vs. OPEX intensive.
  • Heterogeneity within countries: Many countries are multiple countries in one operating in largely separate economies.
  • Legitimacy/ability of governments to impose structural adaptations.
by Francois in Paris on Mon May 26th, 2008 at 08:00:38 PM EST
Are you using PPP GDP or exchange rate GDP?  It should be the latter.
by MarekNYC on Mon May 26th, 2008 at 08:01:00 PM EST
It is exchange rate GDP, though the IEA data set contains both.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 03:07:03 AM EST
[ Parent ]
I think the size of the strategic oil reserves have to be taken into consideration.

Global strategic petroleum reserves - Wikipedia, the free encyclopedia

According to a March 2001 agreement, all 26 members of the International Energy Agency must have a strategic petroleum reserve equal to 90 days of oil imports for their respective country.

by generic on Mon May 26th, 2008 at 08:42:07 PM EST
A friend of mine looked into how the strategic oil reserve actually works in Sweden. Large consumers of oil (think industry) are obliged to keep 90 day of oil consumption in stock. However, the physical presence of oil reserves are never checked, so it can just as well turn out to be on the books, but not in any barrels.

Government should (as large oil consumer) have some though.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue May 27th, 2008 at 08:37:53 AM EST
[ Parent ]
You mean they can be rolling 90-day oil futures and that counts as a strategic oil reserve?


When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 09:06:24 AM EST
[ Parent ]
I am a bit unsure as to what kind of fancy papers futures are, or indeed what what kind of fancy papers counts as reserve. But the picture my friend painted was that where she was looking for storage systems, oil barrels, she found book-keeping. None of us being economists, I am not sure as to what kind of book-keeping.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue May 27th, 2008 at 09:19:03 AM EST
[ Parent ]
We used to have absoltuely vast underground resveres of oil, diesel and gasoline in this country.

Why?

  1. The military was obsessed with bunkers of all kinds. This country looks like a Swiss cheese.

  2. The military and the government was preparing for the last war, WW2, when we were cut off from oil imports for several years.

Actually, during the absurd "missing barrels" episode 10-something years ago people were speculating that all these (later understood as entirely fictious) missing barrels that depressed the oil price to under $10 were hidden in undreground bunkers in Sweden.

The rationality of the market...

And the rationality of government: all that oil was sold at bargain basement prices years ago.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue May 27th, 2008 at 08:39:11 PM EST
[ Parent ]
I don't imagine former Soviet countries like Belorus suffering particularly badly from Oil crunch. Belorus is next door from my birth places; they like driving, but not particularly madly. There was some Soviet dirty demanding industry there, but that scale is long forgotten. Yes, Belarus is sucking cheap Soviet-Russian oil for "ages", but if that must stop they will adopt. The people will not be "surprised" by diminishing supplies - they've seen that since medieval wars and privileges, 20th century world wars and revolutions, and most recently, since the break up of Soviet system. In effect, people are more self-reliant there than in any Wild West (though the trick of mutual support is not forgotten). They will adjust their needs like no one else.

I can say that I experienced a kind of energy blackout: after Lithuania declared independence in March 1990, the Soviet government cut energy supplies the next month, and that blockade continued till July 1991. (PDF). Traffic became more quiet, but travel by bus was still possible (as I started my studies in Vilnius). My family was determined to finish building a new house, now matter the costs...

by das monde on Mon May 26th, 2008 at 08:54:55 PM EST
How about Moldova? They seem to be the forgotten country in Europe - even less attention is paid to them that to Belarus or Albania, and it is much, much poorer than either.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 03:39:12 AM EST
[ Parent ]
Has Romania still got those oilfields I remember from wwII documentaries or are they all drilled out?

Moldova being essentially Romanian anyway (except Transnistria) maybe a closer relationship with Romania would be possible?

Mind you, I have not followed Moldovan politics after the Transnistrian break-away so I do not know anything about present-day relations to Romania.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue May 27th, 2008 at 08:22:47 AM EST
[ Parent ]
Romania is pretty much down, peaked ages ago, but with current prices anything is possible. They are even drilling in Austria again!

As a matter of fact, Romanian production could well be increased, even if they'll never return to peak production, if new investments are done to update the ancient equipment, put new competent engineers in charge, redrill old wells and drill new ones etc.

A Swedish company is doing that very thing.


Well, it's Ukraine now but used to be Romania.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Tue May 27th, 2008 at 08:42:35 PM EST
[ Parent ]
Have they done secondary recovery? i.e. water injection, or tertiary recovery?  Usually at most 40-50% of total reserves can be extracted without secondary recovery.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 12:37:27 AM EST
[ Parent ]
I tried to find some hard information about the UK's reserves, but after about half an hour of Googling I couldn't find anything definitive.

So far as I can tell a significant proportion of the UK's reserves are - er - still in the ground.

E.g. from here we have:

This is good news because it suggests that the UK isn't totally dependent on imports, so in the worst case some oil will still be available for essential services.

The bad news is that it's not clear how large the strategic reserve is - in the sense of barrels of refined products ready for immediate use.

In any case, a 90 day reserve is only a minimal cushion against an oil drought. The strategic reserves are exactly that - emergency measures against a sudden and temporary cut-off.

What worries me about Western economies is that demand reduction measures - like car sharing, bussing, home working, and so on - will need organisation and management. It's going to take months or years before they can have an effect.

So a 90 day reserve, stretched out to half a year or a year with rationing, is going to be a very temporary palliative, and I don't think it's going to make a significant economic difference over a longer period.

If planned demand reduction is needed to make a difference, there's no evidence it's happening yet - at least, not in the UK. What is happening is intense political pressure to lower taxes. People here are trying to convince themselves that all Gordo has to do is cut taxes and everyone will be able to carry on as before. Once Gordo is out and prices still don't start coming down, that's when things will start to get colourful.

Also, I don't think GDP is a good indicator of economic health or robustness. The UK has a faith-based, not an energy-based economy, and it's perfectly possible for the faith to disappear long before the oil does.

When wealth distribution is poor - which it is - even a small change in income will have significant social and political consequences, even if the nominal GDP looks strong.

I think you'll get a more accurate picture of the immediate effects by working bottom up - looking at median income and the percentage of that which will be eaten away by personal energy expenditure in the form of transport and heating.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon May 26th, 2008 at 09:40:16 PM EST
I'd also suggest (though you cover this to some extent in the excerpt cited by Migeru in the diary) looking at activities that combine high oil sensitivity with low incomes (ie thin margins). Currently in France the fishing industry, small haulage contractors and lorry drivers, and farmers, are getting ready to rumble.

Of course, each country has its traditions of revolt, which is another of the parameters of the "social breakdown" question.

by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 27th, 2008 at 02:57:46 AM EST
[ Parent ]
So far as I can tell a significant proportion of the UK's reserves are - er - still in the ground.

That would be consistent with "theory". The Hubbert peak is supposed to take place at around 50% depletion of reserves, and Scotland's North Sea production peaked some time around 2002 so one would expect about 50% of the reserves to still be there.

This is good news because it suggests that the UK isn't totally dependent on imports, so in the worst case some oil will still be available for essential services.

Peak oil is not about oil exhaustion but about limits to production. As Jerome pointed out recently, the fact that oil at $135 still is not making too much of a dent in demand indicates that so far we've just been consuming as much as we needed without regard to the price, but that is now changing and Oil is, for the first time in maybe a century, scarce.

Also, I don't think GDP is a good indicator of economic health or robustness. The UK has a faith-based, not an energy-based economy, and it's perfectly possible for the faith to disappear long before the oil does.

I agree, but we still define a recession in terms of economic growth rates over the short term, and the zeroth-order effect of an oil price spike is to eat away at GDP proportionally to the increased cost of imports.

I think you'll get a more accurate picture of the immediate effects by working bottom up - looking at median income and the percentage of that which will be eaten away by personal energy expenditure in the form of transport and heating.

The trouble is getting good data for that.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 05:01:59 AM EST
[ Parent ]
Migeru:
As Jerome pointed out recently, the fact that oil at $135 still is not making too much of a dent in demand indicates that so far we've just been consuming as much as we needed without regard to the price, but that is now changing and Oil is, for the first time in maybe a century, scarce.

It's only been a couple of weeks and people are still getting used to the idea. It's going to take months before informal demand reduction starts making a difference years before it sinks in that the party is over and some advanced planning would be a wise and sensible thing.

Migeru:

I agree, but we still define a recession in terms of economic growth rates over the short term, and the zeroth-order effect of an oil price spike is to eat away at GDP proportionally to the increased cost of imports.

It's the multipliers that will make it hurt, not the nominal price increase. We've been here before and I don't see it playing out any differently this time. Inflation will rise, interest rates will rise 'to combat inflation' (and good luck with that), and with so many people on borderline incomes already, including debt and food inflation, there's going to be extreme unhappiness.

The particular problem for the UK is that we have a national culture of whining, and very few people have experience of radical self-reliance or of 'make do and mend.'

It's the political implications that bother me the most. It's going to be easy to point the finger at immigrants and brown people (and Brown people) rather than doing anything constructive.

With a culture of blame to draw on, there's going to be a lot of blame going around.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 27th, 2008 at 06:06:51 AM EST
[ Parent ]
ThatBritGuy:
It's only been a couple of weeks and people are still getting used to the idea. It's going to take months before informal demand reduction starts making a difference years before it sinks in that the party is over and some advanced planning would be a wise and sensible thing.
Oil breached $100 just before the new year, and it was below $50 just two years ago. People would have had a couple of year to get used to oil prices rising, had it not been for the Very Serious People™ constantly reminding everyone that this was just a speculative spike due to geopolitical risk and evil scheming Arabs. our politicians are still blaming the producers when it's been clear for about 2 years that they just don't have the spare capacity.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 07:30:06 AM EST
[ Parent ]
Yes, but hardly anyone here does that kind of forward planning. I bought an efficient car last year because I thought there was a good chance we'd be where we are now. According to the showroom, 4x4s were still selling well.

Dealing with reality now doesn't just mean looking at the bigger picture, it means understanding that the politicians are out of the game - they have no clue what's going on - and everyone is going to have to make their own plans, individually and collectively.

It also means accepting that most people won't be making plans, even now.

They're going to wake up next year in a different world with no clue what to do, and no support. They'll whine about how nothing has been done, then realise that nothing is going to be done for them - and then things will get 'interesting.'

You might see government start to wake up and realise there's a problem then.

Or, given Whitehall's record - perhaps not.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 27th, 2008 at 12:04:06 PM EST
[ Parent ]
ThatBritGuy:
I agree, but we still define a recession in terms of economic growth rates over the short term, and the zeroth-order effect of an oil price spike is to eat away at GDP proportionally to the increased cost of imports.

It's the multipliers that will make it hurt, not the nominal price increase.

Any help on getting data on the multipliers?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 08:09:54 AM EST
[ Parent ]
The two key elements are business margins and disposable income.

As disposable incomes shrink, demand for everything except core essentials dries up, GDP is hammered, and there's a credit crash as people default on loans and mortgages. So there's a personal tipping point that creeps up the income curve, as more and people fall off the bottom and their GDP contribution switches from positive to negative.

Likewise if margins shrink and businesses become unprofitable, businesses die, unemployment increases, demand goes down, and GDP is hammered again.

A useful exercise with real numbers would be to get some of the annual accounts posted by haulage and logistics companies at Companies House - that would show what kind of margins they're running on, and how close they are to being killed by current and future price increases.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 27th, 2008 at 12:16:25 PM EST
[ Parent ]
So there's a personal tipping point that creeps up the income curve, as more and people fall off the bottom and their GDP contribution switches from positive to negative.

Negative GDP contribution?
by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 12:26:48 PM EST
[ Parent ]
Aka crime and benefits.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 27th, 2008 at 12:29:47 PM EST
[ Parent ]
How do they contribute negatively to GDP? Criminals are good for GDP - think of all the police pay, prison contracts and so on. And benefits are also good for GDP.
by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 12:32:57 PM EST
[ Parent ]
GDP may be a crappy measurement, but assuming that the state would have employed people doing other stuff if crime was not there, crime is bad for GDP. The part of the economy that is criminal is not taxable and not part of the GDP. Unless you guesstimate it.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue May 27th, 2008 at 05:32:44 PM EST
[ Parent ]
Say it switches from positive to zero.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 02:19:52 PM EST
[ Parent ]
Mig,

You can't take imports/GDP or imports/reserves for China and extrapolate steady. China was an oil exporter until very recently and has just started to become a net importer. So you need to look at the predicted imports which are going to become much bigger very quickly.

Plus, the big problem for China is that this country cannot just hold steady and be content, the way, I believe, India could do. Its social compact requires it to grow fast and faster. If it stops, God knows what is going to happen...

by Francois in Paris on Tue May 27th, 2008 at 10:51:55 AM EST
[ Parent ]
The one thing WE know is that it is highly unlikely to be good, especially at first.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 03:34:34 PM EST
[ Parent ]
What are natural gas reserves like?  Where prices are headed it will be cost effective to convert gas to liquid.  Even if it is only converted to propane, it can be mixed with gasoline.  I assume they are doing this as SOP now.  pentane, hexane, octane, bingo.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 12:43:14 AM EST
[ Parent ]
What this exercise illustrates, for me, is to what extent the former Soviet Union is still a geopolitical unit and the fact that I had more or less stopped thinking of it as one.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 04:53:07 AM EST
Washington hadn't ;)
by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 27th, 2008 at 04:58:41 AM EST
[ Parent ]
Maybe the fact that the Bush administration was full of oilmen and old cold warriors wasn't such a bad thing after all. Still, their neoconnery bungled the execution to a large extent.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 05:04:04 AM EST
[ Parent ]
In fact, they have too terms: the "near abroad", and the "foreign."

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 10:13:13 AM EST
[ Parent ]
They are the proverbial stopped clock.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 03:36:20 PM EST
[ Parent ]
What comes to me with the most surprise is the extent to which China is apparently not faced with major stress.
by afew (afew(a in a circle)eurotrib_dot_com) on Tue May 27th, 2008 at 05:01:44 AM EST
[ Parent ]
China's oil consumption is growing by huge numbers each year. It shot up from 3-4mb/d to 7-8mb/d now is less than 10 years, and it's not slowing down. The imports number is doing worse, given that China (something that a lot of people forget, is the fourth producer of oil (after Saudi Arabia, Russia and the US) with around 4mb/d: it has shot from nothing to 4mb/d in the same period, and all the future consumption growth will translate into import growth.

So far, most of China's relelntless energy growth has been provided by coal, but given that it is beginning to lose its self-sufficiency in that fuel as well, future prospects are dire (how much coal can a 1.5 billion ton per year producer can import from a 200 million ton producers, ie Australia?).

Yes, they have cash reserves, but these are mostly in dollars - their value in oil is uncertain, to say the least.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 08:15:11 AM EST
[ Parent ]
So far, most of China's relelntless energy growth has been provided by coal, but given that it is beginning to lose its self-sufficiency in that fuel as well, future prospects are dire (how much coal can a 1.5 billion ton per year producer can import from a 200 million ton producers, ie Australia?).

More like how much coal can a 3 billion ton consumer import from, say, a billion ton producer like the US.

China's coal situation to me seems to bear at least a slight resemblance to that of the US with oil forty or fifty years ago.

by MarekNYC on Tue May 27th, 2008 at 09:07:34 AM EST
[ Parent ]
To what extent can increased extraction tide them over while they implement other energy solutions?
by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 09:13:42 AM EST
[ Parent ]
I'd say to a good extent. Just like increased Gulf production and the mega discoveries of Mexico, Alaska, and the North Sea did for the US - and they seem to have about the same approach...
by MarekNYC on Tue May 27th, 2008 at 09:17:16 AM EST
[ Parent ]
I remember that it was already significantly more than the US's roughly 1 billion ton production, but did not remember it was that much bigger already.

That's a lot of carbon dioxide...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 10:15:23 AM EST
[ Parent ]
And why their air is more visible than breathable.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 12:50:00 AM EST
[ Parent ]
With regard to China, I think you make a good case that they are, on a comparison basis, pretty well placed to avoid a recession due to an oil price spike. However:

-There's rural China and city China, and they have little in common. Having said that, most of the GDP is in the cities so it looks like the economy really isn't all that oil-dependent (of course, it's coal-dependent).
-It's not going to be a spike, but a prolonged shortage. So ability to adapt may be more telling in the long run than currency reserves. Besides, USA may simply print dollars as they are insanely accepted in most places.
-China makes its money from exporting. If high fuel costs mean more local production in the near future (which I would hope, not because I'm against China but because I'd like my planet to stay livable), its economy may suffer from the change.
-It's not just the level, it's the trajectory. Chinese people used not to drive, so the level of dependence may be shooting up. Which brings us to the last, and most important:
-My understanding is that China is held together by the promise of fast growth. That it may be ably to ward away a recession based on economic fundamentals (highly likely) may not be enough to avoid a sharp slowdown of growth. Which may be enough to trigger major social unrests, especially since the country is speeding towards other resources problems, namely water and breathable air.

Now, I don't know enough to make an informed judgment on these factors, but I'm not sure that normal rules apply in China.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue May 27th, 2008 at 05:18:24 AM EST
There's rural China and city China, and they have little in common. Having said that, most of the GDP is in the cities so it looks like the economy really isn't all that oil-dependent (of course, it's coal-dependent).

The IEA data is in MToe (million tonnes of oil equivalent) and the international fossil carbon markets tends to be priced off oil regardless of whether it's coal, oil or gas that is being considered.

It's not going to be a spike, but a prolonged shortage. So ability to adapt may be more telling in the long run than currency reserves. Besides, USA may simply print dollars as they are insanely accepted in most places.

The range of imports to reserves is about one hundred from China to the US or Western Europe. That is, if it comes to that, China can buy itself 100 times more time with its currency reserves. And the amount of money the US would have to print to balance that would crash the dollar. Also, China has reserves or the order of its GDP (!) so it can be several years' worth of oil purchases (at current prices).

As for trends I'd need time-series data ($0.03 per data point to access the IEA database gives you an idea of the order of magnitude of the price of data), and for social cohesion I don't even know where to look...

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 05:50:04 AM EST
[ Parent ]
I realise that it's oil equivalent -China has its own coal, so they won't import all that much when they can use coal.

Anyway, I'm sure they will be able to buy what they need. The question will be how all that plays out (if they use their reserves, they will no longer prop up the dollar, exchange rates will change a lot...). Still, it's clear that their huge reserves are an amazing cushion.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue May 27th, 2008 at 07:12:43 AM EST
[ Parent ]
As much as both economists and politicians like to forget this, econometrics only gets you so far, and then politics takes over.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 07:24:21 AM EST
[ Parent ]
Also, if social upheaval disrupts the export machine what  will most large US retailers do?  And what are the possibilities of loss or destruction of foreign capital? In such a situation, what, practically, do their large reserves of US dollars mean?  They have a lot of nukes and delivery systems and the military and communist party are still the two strongest institutions.

They have not used a period of unprecedented prosperity  to develop more articulated social structures as far as I can see.  The rule of law and impartial justice are still pretty much new and foreign concepts. On what can they fall back?  The "Little Red Book"? another "Great Flop Backwards"?  It could get interesting.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 01:07:19 AM EST
[ Parent ]
to put in my twopenn'orth on the reserve's issue of China and the EU/US. I think you have it seriously wrong.
  • if EU/US seriously crash, $/EURO is worth nothing any more, so China couldn't buy oil from it
  • reserves doesn't say anything about the state's fiscal health. China is not communist any more. The current account surplus (which by the way is in the same order as Germany's) is not state income. The enterprises change their earned Dollars to RMB, which means, the state has the Dollar, but the enterprise has the RMB. To prevent inflation from too much RMB, the Chinese state sterilises a part of it by selling RMB debt, that means the Chinese state has lots of Dollars and lots of RMB debt. As recently the Chinese reserves increased much much faster than the current account surplus mostly due to speculators betting on RMB appreciation, quite a lot of these RMB are owned by foreigners. Of course the Chinese state could disown foreigners owning enterprises and RMB in China, but that would give other countries the perfect opportunity to do the same with the bonds hold by the Chinese state. Currency depression is an export subsidy, and not a cheap one.
  • the currency depression in China has led to negative interest rates. This has led to massive malinvestment, certainly much bigger than e.g. currently in the US. As you can see there, if suddenly the hot stuff, e.g. low interest rates or a depressed currency, vanishes, the malinvestment will not be profitable any more. China is in a serious trap and won't come out of it without real trouble. You may google 'Michael Pettis' to find a blog, where he speaks about such stuff. So using the currency reserve will not only devalue the currency reserve, but as well impose serious trouble in the Chinese economy, even without peak-oil.

  • countries who suppose to be reserve currency countries don't build up reserves. It doesn't make sense. Therefore it is not useful to put in the US and probably not the Eurozone into your picture
  • everybody can want to be the reserve currency, but in the end you are dependent on the trust of others, that you will deliver some decent goods for the paper you sell them for goods. I can't give a formula, how to build trust, but certainly the $ and the Euro are the currencies in which reasonable agents would invest more than any others (or currently mostly the Euro, as the $ currently is mostly bought for political reasons, but when there is peak oil, maybe some countries will still be happy to be a friend of the guy with the biggest cannon)


Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers
by Martin (weiser.mensch(at)googlemail.com) on Thu May 29th, 2008 at 08:26:27 PM EST
[ Parent ]
When we see social unrest and political upheaval in China... start digging.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 12:52:26 AM EST
[ Parent ]
Another facet that will complicate matters is the degree to which a country's foreign currency reserves are spread across a wide basket of currencies or concentrated in one primary currency. All other things being equal, I would expect a country that has a wide spread of currencies in reserve to be less exposed than one that has only $ or Yen or €. After all, if our politicians are stupid and irresponsible, there is a very real risk that one or more of those currently major currencies will go belly-up. In which case your reserves are going to be worth not-so-much.

As an aside, it might be worthwhile to compare to balance of trade instead of currency reserves. If this is going to be a long transition (and I think it will), then the currency reserves are going to suffice like a hand pump in New Orleans, whereas the ability to eat into a favourable balance of trade might be a more robust measure.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 27th, 2008 at 05:54:23 AM EST
Energy fears looming, new survivalists prepare

Convinced the planet's oil supply is dwindling and the world's economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn't prepare.

The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.

These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.

by das monde on Tue May 27th, 2008 at 06:27:35 AM EST
They were doing exactly the same as Y2K approached - the U.S. always has a bunch of people like this. I actually worked with somebody who thought like this, though he only went as far as to sell all his stocks (smart move, that...) and to look around at prices of homesteads.

The article suggests that they are relying on solar panels for power. What happens when they eventually wear out, assuming that civilization has already collapsed?

by gk (gk (gk quattro due due sette @gmail.com)) on Tue May 27th, 2008 at 07:24:15 AM EST
[ Parent ]
<shrug> They're cultists: who expects rationality?

The myth of the individual is deeply embedded in a lot of places these days: who needs civilisation?

by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 07:28:57 AM EST
[ Parent ]
When you read the article, the people describe are pretty rational and reasonable - a lot of it is about using less energy, growing some food, learning skills that are valuable in a resource-constrained world.

Nothing to scoff at. Very little was about creating self-sufficient compounds and arming them, and a lot more about being sustainable.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 08:10:17 AM EST
[ Parent ]
Good article lead then.
by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 08:16:13 AM EST
[ Parent ]
I'm not sure. I definitely agree that it can be read the way you did, and now that I look carefully at the article, I agree that most of it really does make sense.

But despite this, there is some of discussion of armed compounds, marauding hordes, and the like, that you would probably not see in a similar article in Europe.  I suspect that those of us who have lived in the U.S. for a long time read articles like this differently, having encountered survivalists like this before. These guys always seem to be reasonable, in precisely this way, but there always seems to be an undercurrent of antisocial lunacy just under the surface.

One possibility, though, is that the movement is indeed rational, like you suggest, with only a few survivalist lunatics, but that the journalist has automatically written the article in a way that fits the standard narrative.

by gk (gk (gk quattro due due sette @gmail.com)) on Tue May 27th, 2008 at 08:28:20 AM EST
[ Parent ]
It doesn't have to be either/or. Just because you're paranoid, etc.

Survivalism makes a kind of sense in the US because there's enough space to live relatively self-sufficiently far enough away from marauding traumatised survivors. And they still have remnants of that pioneer spirit - which was quite a thing, in its way. The genocide of the Indians wasn't pretty, but it takes a certain kind of person to survive a trek across a continent in a covered wagon.

Survivalism makes no sense at all in Europe because population densities make survival unlikely, even with a gun and a small holding. The best solutions - but currently the least likely ones - have to be political.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue May 27th, 2008 at 11:56:15 AM EST
[ Parent ]
And who are they relying on for bullets?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 07:31:17 AM EST
[ Parent ]
You can make your own - just remember to retrieve the metal from your victims. Making propellant for modern weapons is probably more interesting.
by Colman (colman at eurotrib.com) on Tue May 27th, 2008 at 07:33:12 AM EST
[ Parent ]
That was one consideration in our moving to Northern Arkansas.  It is about 700 ft above current sea level, The Ozark plateau will likely continue to regularly wring significant rainfall out of the atmosphere.  We have two large lakes with hydro capability. Clean air, clean water, abundant game, and only about 3 million souls.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 01:14:20 AM EST
[ Parent ]
I'm surprised at how bad Ireland looks in terms of currency reserves.  For quite a few years now we have been putting 1% of GDP into a National Investment Reserve to fund future public sector pension requirements - something which I think is very unusual if not unique in terms of national accounts.  Does this distort the currency reserve picture?  It is a significant hedge against future expenditures/costs even if not directly energy related.  It will help soften the blow of future energy related costs.  

Having said that Ireland is unconscionably dependent on imported energy and has been slow at developing its significant wind resources and improving the insulation levels of its housing/building stock.  We will have to readjust fast, but there are some signs that this is happening to a limited degree.

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 27th, 2008 at 07:11:08 AM EST
Note this is currency reserves as a multiple of net energy imports, not as a fraction of GDP. In absolute terms, Ireland has $1bn in reserves which is not small potatoes.

Question: given this, would it make more sense to change the second chart to have both axes as a fraction of GDP?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 07:20:13 AM EST
[ Parent ]
Not being an economist, I'm not clear on the significance of currency reserves in this discussion. Do we mean foreign currency reserves? Since joining the Euro, Ireland has had much less need of maintaining foreign currency reserves partly because it doesn't have its own currency to protect against speculation etc., and partly because much more of it's trade is within the Euro area.

If we are discussing "ability to pay" for oil imports, surely trade surpluses, budget deficits, national debt as % of GDP etc. are much more relevant measures?

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue May 27th, 2008 at 07:13:38 PM EST
[ Parent ]
Not quite unique. Denmark is doing something similar w.r.t. pension scheme. Of course, here it's mostly a "tax-without-taxing" thing...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 27th, 2008 at 07:25:54 AM EST
[ Parent ]
[The] most vulnerable countries by this measure - in the sense that an oil price increase will eat a larger fraction of their GDP

I am somewhat split as to this being a good measurement. I think the relationsship between oil prices and GDP might be quite different.

Cheap energy drives a lot of other economic activity. Just to get a pretty clear example of wht I am getting at, picture early 19th century Russia. Almost all of the work is provided - dirt cheap - by serfs. It is quite possible that Faberge produced more GDP then all the serfs together. Now, imagine you had more producers of valuable trinkets, making the serfs percentage even less. Would that make the economy better or worse of should the serfs make themselves scarce. What I am getting at is that when some of our energy spikes in price, having lots of people doing fancy things might very well turn out to be a liability.

On the other hand, I think where the GDP ends up today is not a measure of economic efficiency, but of political power. We have a system that ships lots of stuff from some countries and to some countries. This system was until some 50 years ago held in place by direct political control by the governments in the countries receiving the stuff. The rich/ high GDP countries still holds much political power which they can use to get more of the shrinking supply of resources.

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by A swedish kind of death on Tue May 27th, 2008 at 09:12:07 AM EST
Since Eritrea turned up as one of the countries most vulnerable, and I happen to know a bit about it, I figured it is a interesting example. I think it can be said with some certainty what will happen with more expensive oil in Eritrea. Eritreas government is rather predictable.

Oil in Eritrea is mainly used for two things: oil power plants and transport. Electrical power will be rationed within the mayor cities, the smaller cities will not get much at all. This will be used to further the governments control. Transport will get more expensive and probably rationed. Military and governmental functions will take priority. This will also be used to further the governments control. Military is by the way mostly infantry. Eritreas few airplanes and tanks can not use all that much oil.

But, most of power in Eritrea is muscle power, human or animal. Most consumtion is based on localy produced agricultural products. If the local bar looses  power to run the tv and fridge, you can no longer have a cold bira (locally produced, tastes differently everywhere) and watch the game. Which sucks, but thats life.

For the majority of the population things will not change much.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue May 27th, 2008 at 11:01:01 AM EST
Superficially, Moldova is dirt poor and appears to be very vulnerable, but I wonder whether that is the case on closer inspection. From wikipedia:
The largest part of the country lies between two rivers, the Dniester and the Prut. Moldova's rich soil and temperate continental climate (with warm summers and mild winters) have made the country one of the most productive agricultural regions and a major supplier of agricultural products in the region.
Moldova enjoys a favorable climate and good farmland but has no major mineral deposits. As a result, the economy depends heavily on agriculture, featuring fruits, vegetables, Moldovan wine, and tobacco. The country is considered to have the cleanest air in the world.[49] Moldova must import all of its supplies of petroleum, coal, and natural gas, largely from Russia. After the break up of the Soviet Union in 1991, energy shortages contributed to sharp production declines. As part of an ambitious economic liberalization effort, Moldova introduced a convertible currency, liberalized all prices, stopped issuing preferential credits to state enterprises, backed steady land privatization, removed export controls, and liberalized interest rates. The government entered into agreements with the World Bank and the IMF to promote growth. Recent trends indicate that the Communist government intends to reverse some of these policies, and recollectivise land while placing more restrictions on private business. The economy returned to positive growth, of 2.1% in 2000 and 6.1% in 2001. Growth remained strong in 2007 (6%), in part because of the reforms and because of starting from a small base. The economy remains vulnerable to higher fuel prices, poor agricultural weather, and the skepticism of foreign investors. In agriculture, the economic reform started with the land cadastre reform.

...

In 2005 (Human Development Report 2008), the registered GDP per capita US $ 2,100 PPP, which is 4.5 times lower than the world average (US $ 9,543). Moreover, GDP per capita is under the average of its statistical region (US $ 9,527 PPP). In 2005, about 20.8% of the population were under the absolute poverty line and registered an income lower than US $ 2.15 (PPP) per day. Moldova is classified as medium in human development and is at the 111th spot in the list of 177 countries. The value of the Human Development Index (0.708) is below the world average. Moldova remains the poorest country in Europe in terms of GDP per capita: $ 2,500 in 2006.

On the political situation there's this:
There is disagreement as to whether elections and politics in Moldova is carried out in a free and democratic climate on the part of certain organizations. The United States Senate has held committee hearings on irregularities that marred elections in Moldova, including arrests and harassment of opposition candidates, intimidation and suppression of independent media, and state run media bias in favor of candidates backed by the Communist-led Moldovan Government.[1] Other critics have also referred to the Communist Party government as being authoritarian.[2][3] Nevertheless, George W. Bush stated that: "We note and welcome Moldova's positive record since independence in conducting free and fair elections and in implementing democratic reforms."[4]
There have also been reports of politically motivated arrests and arrests without valid legal grounds. Such arrests are allegedly carried out against opponents of the Communist Party government of President Vladimir Voronin. In one case which was criticized by various Western organizations and individuals, opposition politician Valeriu Pasat was sentenced to ten years imprisonment on dubious grounds.[5]
Moldova is aiming for EU membership, though I don't know how many decades it's going to take given the economic condition of the country.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 03:01:55 PM EST
[ Parent ]
Moldova's rich soil and temperate continental climate (with warm summers and mild winters) have made the country one of the most productive agricultural regions and a major supplier of agricultural products in the region.

I remember an exchange with Helen regarding (I think) Bulgaria, which has somewhat similar conditions - generally poor, but less reliant on complex, energy driven technologies. Remember, though, that any region considered to be agriculturally productive is relying on fossil fuel intensive green revolution fertilizers and pesticides. Just because the products are hauled around by bike and cart doesn't change that.

Come to think of it a GDP / total energy use chart would be another nice data point.

you are the media you consume.

by MillMan (millguy at gmail) on Tue May 27th, 2008 at 06:13:25 PM EST
[ Parent ]
It is always possible, locally, to return to use of animal dung fertilizer, crop rotation with legumes, etc.  Won't support high population density but might not have to. Hell, I grew up milking a cow, letting most of the milk curdle and feed to the pig, keeping a few chickens and tending a large garden.  We have a working well on the property in case city water becomes problematic or too expensive for irrigation.  I didn't expect things to go to hell as fast as they have, but the wife did, (on totally other grounds.)  

Best of all, I don't need to drive much, and can still ride a bike if need be. I have always kinda dismissed the survivalists, but now....

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 01:27:32 AM EST
[ Parent ]
Ya know, we'r all just a bunch uh dumb Arkies here. :-)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 01:34:06 AM EST
[ Parent ]
The US is not very densely populated.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2008 at 04:03:12 AM EST
[ Parent ]
I'm guessing that the countries worst hit will be those in which food production has been most industrialised, land ownership most concentrated into fewest hands, and agriculture most ruthlessly repurposed for cash crop (export) production rather than for local eating.  Countries which have decimated their ag/biotic diversity in favour of imported monocrops dependent on heavy fossil-based inputs.  Countries/regions whose elites have based their power and fortunes on the extraction of raw materials and cash crops to be shipped (via fossil fuel, natch) to the industrial hoppers of the bosses.

This doesn't necessarily mean "only poor third world countries".  Cuba for example might come through pretty well, because of its land reform and relocalisation programme (food security) and relative independence (due to embargo, ironically) on export and resource extraction.  Some 3w countries scorned as "poor and underdeveloped" might also look good compared to, say, the US and Canada where land ownership concentration and fossil-dependent food production have reached grotesque, terrifying extrema.

I live on an island where, best estimates suggest, there is at any one time about 7 days' food supply for the population.  This island used to be food self-sufficient, or nearly so, only a generation and a half ago.  Now, only fossil-intensive cargo vessels and trucks provide a steady food supply, and the cost of operating those is climbing daily.  Water's not so much a problem here most of the year (though there are droughty summers) but it will be in many other places.

Everyone is still (imho) stressing out about superficial stuff like the cost of driving luxury cars and whether they can have internet/TV 24x7 and how to keep factories running that produce pallet after pallet of utterly useless cr*p.  Or what will happen to the totally-fictional "value of money."  But as someone -- I forget who -- said, any culture is only about 9 meals away from violent chaos.  It's at about the ninth missing meal that people are willing to steal, kill, anything to feed their kids.  

So I suggest that the nations that will be worst hit by peak oil are those with the most delocalised, long-haul-dependent food supply, or those who have rejiggered their agriculture most grotesquely to serve that long-haul transnat food system, or -- the jackpot -- both.  That is, if we consider "worst hit" to mean greatest suffering and hardship for ordinary people, rather than greatest fictional fortunes lost in imaginary abstract dollars by rentier elites.

This is all ignoring, of course, the wild cards of climate change, novelty pest incursions, saline incursion, drawdown of water reserves, and other issues not directly attributable to fossil fuel scarcity and price increases.  Also I'm ignoring, because it's horribly depressing, the very real prospect that nations that still have functional farmland and local food resources will simply be invaded by their less fortunate neighbours (who, being "advanced" enough to have wrecked their biotic base, will be as wealthy in cars, arms, poisons, etc as they are poor in food and soil) and pillaged.

I still think it is not too late to avert many of these worst-case nightmares.  But a successful soft landing programme requires nothing short of deconstructing the central precepts of the industrial/"Western" culture, including compound interest, finance capitalism, "economy of scale," optimisation/efficiency/rationalisation, white/anglo supremacy, and so on and so on... big project to achieve in a rather limited time frame, transforming wetiko culture into something more reality-based.

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Tue May 27th, 2008 at 02:31:44 PM EST
I must miss a reference here, but I'm not quite getting the word?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 02:38:13 PM EST
[ Parent ]
Jack Forbes' book popularised the (transliterated) Cree word "wetiko"

Wiktionary entry... "the characteristic of a wetiko is that he consumes other human beings for profit..."


The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Tue May 27th, 2008 at 03:09:39 PM EST
[ Parent ]
I had never heard of it.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue May 27th, 2008 at 03:21:04 PM EST
[ Parent ]
Ah, a wendigo!
The Wendigo (also Windigo, Windago, Windiga, Witiko, Wihtikow, and numerous other variants)[1] is a mythical creature appearing in the mythology of the Algonquin people. It is a malevolent cannibalistic spirit into which humans could transform, or which could possess humans. Those who indulged in cannibalism were at particular risk, and the legend appears to have reinforced this practice as taboo.


When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 04:05:33 PM EST
[ Parent ]
immortalised in Anglophone culture by Thurber, I believe:

... perhaps they saw the Wendigo
or were eaten by bears.
this I know not, I only know
that buses headed for Scranton travel in pairs.

(had to do this from memory since -- for some inexplicable reason -- this much-loved bit of doggerel appears not to exist in the googleverse!)

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Tue May 27th, 2008 at 09:43:27 PM EST
[ Parent ]
Cuba is exhibit A in lack of capacity to adjust to a post fossil fuel future w/o some sort of energy substitute. They remain one of the most import dependent countries in the world.  Imports which it can pay for because it gets dirt cheap oil and has a flourishing tourist industry.  Africa would also be completely screwed minus the massive industrial ag surpluses. In general the poorer the country is the less margin it has to adjust to lower amounts of food in the world - they already eat less, and more of their calories come in the form of basic starch crops rather than meat and processed food.  
by MarekNYC on Tue May 27th, 2008 at 02:47:08 PM EST
[ Parent ]
How can Cuba both be an example of how to adapt and an example of failure to adapt? Can you two get your sources out so we can decide this question? Parallel diaries?


When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Tue May 27th, 2008 at 02:52:52 PM EST
[ Parent ]
Post Soviet subsidy Cuba adapted quite well given the constraints it was under, greatly reducing the fossil fuel and industrial fertilizer it used to produce its food. The problem is that even with that adaptation it still had to use some of those, and it remained very heavily dependent on food imports.  
by MarekNYC on Tue May 27th, 2008 at 03:02:10 PM EST
[ Parent ]
Here is an overview of the Cuban agriculture story in a form familiar to me from documentaries, first-hand testimony of friends who have done the susti ag tours, etc.  I note the intriguing excerpt:

Despite the embargo, in 2000, President Clinton signed the Trade Sanctions Reform and Export Enhancement Act (TSRA), which re-authorized the direct commercial export of food products and agricultural products via cash transactions from the United States to Cuba - but not from Cuba to the United States. [emphasis mine -- DeA]

In September 2002, after the U.S. Food and Agribusiness Exhibition took place in Havana, the Cuban government purchased more than $91.9 million in food and agricultural products from subsidiaries of U.S. companies based in Latin America and Canada and directly from U.S. companies.

Archer Daniels Midland (ADM), one of the world's largest exporters of cereal grains and oilseeds, signed a $19 million contract for soybean oil, soybeans, soy proteins, corn, margarine, and rice. In 2001, ADM's lobbying - combined with wreckage in Cuba after Hurricane Michelle - was the tipping point that persuaded the Bush Administration to allow the first sale of goods directly from the United States to Cuba since 1962.

The American Corn Growers Association (ACGA), which, to date, has not taken up trade negotiations with Cuba, would be interested in trade sometime in the future, said its chief executive officer.

"We should be exporting to any nation that needs food," said CEO Larry Mitchell.

With Cuba's well-documented ability to feed itself, why would the Cuban government be interested in spending $91.9 million on food imports?

John S. Kavulich II, president of the U.S. Trade and Economic Council based in New York City, said, "There is a strong political component to the Cubans' decision to purchase food products from us. Of the products purchased since 2001, nearly all of them are available from other sources at better prices."

Kavulich cited rice as an example. The Cubans could buy rice from Vietnam at a significantly lower price, but they choose to purchase from purveyors like ADM instead.

Food First's Rosset agrees. "I believe the Cubans are buying from the U.S. as a political gesture. They hope the food corporations will lobby the U.S. government on their behalf to lift the embargo."

Whether the Cubans bought food from american agricorps as a tit-for-tat deal in an attempt to get the travel and financial embargo lifted, or whether they faced any actual shortage of staple crops, I dunno.  I do know that for many USians of conservative persuasion, Castro is the Great Satan and Cuba is anathema:  nothing that Cuba does can be working.  As the last "actually existing socialism" on earth, it must be publicly proclaimed and proven a contemptible failure so that happy capitalists can dance on Marx's grave.  Op/eds appear regularly in US papers celebrating Castro's great age and infirmity and confidently predicting that "freedom" (meaning US domination) will come to Cuba just as soon as the old tyrant is dead.  

Recently a US op/ed joyfully announced that Raul Castro is likely to relax restrictions on private car ownership and permit real estate speculation -- hey, that sounds like democracy and freedom to me :-)  more like the stupidest possible moves to make at this particular historical moment, but -- as Chekov's protagonist muses at the end of "Three Years" -- we will live and we will see.

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Tue May 27th, 2008 at 10:10:19 PM EST
[ Parent ]
With Cuba's well-documented ability to feed itself, why would the Cuban government be interested in spending $91.9 million on food imports?

That statement makes me rather skeptical of the report. Cuba has a well documented inability to feed itself.

Food import dependency dropped drastically in the nineties from about sixty percent to forty percent - that's not what I'd call self-sufficient. Part of that reduction came courtesy of the reforms you rightly praise, but part because of a reduction in food intake to the point of mass malnutrition (though there again, Cuba's well organized and equitable food distribution system prevented the mass starvation that would have ensued in a third world country which relied on the market to enforce demand destruction).

If you feel at looking at some of the stats see this article (written by an anti-Castro academic, but the stats come from the FAO) or wander through the FAO data yourself over here Their latest data (2003) shows that Cuba's domestic production accounted for a little under half of its population's grain consumption (by far the single largest source of calories), one seventh of its edible oil consumption, and about sixty percent of its meat and dairy consumption. The areas where it was self sufficient were roots and tubers and sweeteners.

Cuba's a great example for the argument that we can make sharp reductions in the fossil fuel inputs in agriculture. It's also a great example for how the complete elimination of fossil fuels without some sort of substitute would spell disaster.

by MarekNYC on Wed May 28th, 2008 at 02:09:02 PM EST
[ Parent ]
Mig,

What a great thread!

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 04:05:32 PM EST
Thank everyone else for their comments!

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2008 at 05:40:23 PM EST
[ Parent ]
Of course. They are what make the thread.  But your set up and continuing comments tied it together.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 30th, 2008 at 01:19:05 AM EST
[ Parent ]
I think you need to separate the current relationship between oil use and GDP. While historically, for perhaps the last 100 years or so, these have been tightly connected, they don't need to be. For example, if office work was to be completely relocated to home offices, the commuting fuel demand would drop significantly with little or no change to the economy.
by asdf on Thu May 29th, 2008 at 04:20:10 PM EST
But the time scale of oil price increases is much faster than that of reorganization of the economy, so in the short term one can assume that the zeroth-order impact of an oil price change, especially given the low price elasticity of oil demand, is to add/subtract the extra cost of the exported/imported oil to the GDP.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Thu May 29th, 2008 at 05:39:55 PM EST
[ Parent ]
Circumstances can elicit changes that are shown to work.  Under the pressure of necessity these can quickly be widely adopted.   Schedule shifting was shown to greatly improve traffic flow in the 1984 L.A. Olympics.  After that experience many employers became more flexible in their hours.  Telecommuting was shown to be feasible after earthquakes in Northridge in 94 and in Oakland later.  I would also point out how quickly both England and Germany adapted production to the effects of bombing in WWII.  If one is staring into the abyss....

Necessity is the mother of innovation and adaptation as well as of invention.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri May 30th, 2008 at 01:31:39 AM EST
[ Parent ]


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