[Molnbo_Ecovilliage_Project] German research -- 'peak oil is here'

Ed Griffith Jones ed at acrewoods.net
Fri Sep 3 08:33:01 CDT 2010

Thought this would be interesting to folk...


A report from Greenbang, and the related article from Der Spiegel.

The report itself doesn't seem to be on the Bundeswehr Transformation
English portal (yet).



Peak oil is here: German think tank

Greenbang, Thursday 2nd September 2010

What will 2010 be remembered for? According to a leaked report from a German

think tank, this could be the year that witnesses the arrival of peak oil:
that is, a global maximum in petroleum production levels to be followed by a

steady — or precipitous — decline.

The report from the Bundeswehr Transformation Centre, described in Spiegel
Online, was prepared for the German military but not intended for release.
study warns of security impacts likely to develop as global oil production
peaks and then dwindles. Among those effects, which — according to the
report —
could be felt within 15 to 30 years:

# Rising prominence of oil-exporting countries: As petroleum becomes harder
come by, those nations with any supply to spare will be able to flex more
global muscle and expand the scope of their influence;

# Less free market, more politics: Growing competition for dwindling oil
supplies will likely bring a return of more of the “privileged partnerships”

last seen in petroleum markets before the 1973 Middle East oil embargo;

# Price shocks, shortages, rationing and collapse: With nearly every aspect
modern society — from agriculture and transportation to medicine and
communications — dependent upon oil, declining supplies could lead to a
chain reaction of economic and political crises.

The German report echoes the analysis offered by a similar study released in

March by the US military. The “Joint Operating Environment 2010″ document,
prepared by the US Joint Forces Command, warned that the world’s “surplus
production capacity could entirely disappear” by 2012. Such an energy
shortfall could lead to food shortages, regional breakdowns in security and
growing risk of petro-dollars being siphoned into terrorist networks, the
report found.

Leaders in the UK have also recently been wrestling with the spectre of
looming energy shortages. Earlier this year, the UK Industry Task Force on
Peak Oil & Energy Security warned an oil crunch could begin hitting Britain
hard within five years. And the Guardian recently reported that UK
while in the past dismissive of the peak oil concept, appear to be closely
guarding documents related to the issue from public release.

As the late and greatly missed oil industry analyst Matthew Simmons once
noted, peak oil is “one of these fuzzy events that you only know clearly
you see it through a rear view mirror, and by then an alternate resolution
generally too late.”

If those experts in Germany, the US and the UK are right, we might find
ourselves peering into that rear view mirror sooner than some expect.


'Peak Oil' and the German Government:
Military Study Warns of a Potentially Drastic Oil Crisis

Stefan Schultz, Der Spiegel Online, 09/01/2010

A study by a German military think tank has analyzed how "peak oil" might
change the global economy. The internal draft document -- leaked on the
Internet -- shows for the first time how carefully the German government has

considered a potential energy crisis.

The term "peak oil" is used by energy experts to refer to a point in time
global oil reserves pass their zenith and production gradually begins to
decline. This would result in a permanent supply crisis -- and fear of it
trigger turbulence in commodity markets and on stock exchanges.

The issue is so politically explosive that it's remarkable when an
like the Bundeswehr, the German military, uses the term "peak oil" at all.
a military study currently circulating on the German blogosphere goes even

The study is a product of the Future Analysis department of the Bundeswehr
Transformation Center, a think tank tasked with fixing a direction for the
German military. The team of authors, led by Lieutenant Colonel Thomas Will,

uses sometimes-dramatic language to depict the consequences of an
depletion of raw materials. It warns of shifts in the global balance of
of the formation of new relationships based on interdependency, of a decline

in importance of the western industrial nations, of the "total collapse of
markets" and of serious political and economic crises.

The study, whose authenticity was confirmed to SPIEGEL ONLINE by sources in
government circles, was not meant for publication. The document is said to
in draft stage and to consist solely of scientific opinion, which has not
been edited by the Defense Ministry and other government bodies.

The lead author, Will, has declined to comment on the study. It remains
doubtful that either the Bundeswehr or the German government would have
consented to publish the document in its current form. But the study does
how intensively the German government has engaged with the question of peak

Parallels to activities in the UK

The leak has parallels with recent reports from the UK. Only last week the
Guardian newspaper reported that the British Department of Energy and
Change (DECC) is keeping documents secret which show the UK government is
more concerned about an impending supply crisis than it cares to admit.

According to the Guardian, the DECC, the Bank of England and the British
Ministry of Defence are working alongside industry representatives to
a crisis plan to deal with possible shortfalls in energy supply. Inquiries
made by Britain's so-called peak oil workshops to energy experts have been
seen by SPIEGEL ONLINE. A DECC spokeswoman sought to play down the process,
telling the Guardian the enquiries were "routine" and had no political

The Bundeswehr study may not have immediate political consequences, either,
but it shows that the German government fears shortages could quickly arise.

According to the German report, there is "some probability that peak oil
occur around the year 2010 and that the impact on security is expected to be

felt 15 to 30 years later." The Bundeswehr prediction is consistent with
of well-known scientists who assume global oil production has either already

passed its peak or will do so this year.

Market Failures and International Chain Reactions

The political and economic impacts of peak oil on Germany have now been
studied for the first time in depth. The crude oil expert Steffen Bukold has

evaluated and summarized the findings of the Bundeswehr study. Here is an
overview of the central points:

# Oil will determine power: The Bundeswehr Transformation Center writes that

oil will become one decisive factor in determining the new landscape of
international relations: "The relative importance of the oil-producing
in the international system is growing. These nations are using the
resulting from this to expand the scope of their domestic and foreign
and establish themselves as a new or resurgent regional, or in some cases
global leading powers."

# Increasing importance of oil exporters: For importers of oil more
competition for resources will mean an increase in the number of nations
competing for favor with oil-producing nations. For the latter this opens up
window of opportunity which can be used to implement political, economic or
ideological aims. As this window of time will only be open for a limited
period, "this could result in a more aggressive assertion of national
interests on the part of the oil-producing nations."

# Politics in place of the market: The Bundeswehr Transformation Center
expects that a supply crisis would roll back the liberalization of the
market. "The proportion of oil traded on the global, freely accessible oil
market will diminish as more oil is traded through bi-national contracts,"
study states. In the long run, the study goes on, the global oil market,
only be able to follow the laws of the free market in a restricted way.
"Bilateral, conditioned supply agreements and privileged partnerships, such
those seen prior to the oil crises of the 1970s, will once again come to the


# Market failures: The authors paint a bleak picture of the consequences
resulting from a shortage of petroleum. As the transportation of goods
on crude oil, international trade could be subject to colossal tax hikes.
"Shortages in the supply of vital goods could arise" as a result, for
in food supplies. Oil is used directly or indirectly in the production of 95

percent of all industrial goods. Price shocks could therefore be seen in
almost any industry and throughout all stages of the industrial supply
"In the medium term the global economic system and every market-oriented
national economy would collapse."

# Relapse into planned economy: Since virtually all economic sectors rely
heavily on oil, peak oil could lead to a "partial or complete failure of
markets," says the study. "A conceivable alternative would be government
rationing and the allocation of important goods or the setting of production

schedules and other short-term coercive measures to replace market-based
mechanisms in times of crisis."

# Global chain reaction: "A restructuring of oil supplies will not be
possible in all regions before the onset of peak oil," says the study. "It
likely that a large number of states will not be in a position to make the
necessary investments in time," or with "sufficient magnitude." If there
economic crashes in some regions of the world, Germany could be affected.
Germany would not escape the crises of other countries, because it's so
tightly integrated into the global economy.

# Crisis of political legitimacy: The Bundeswehr study also raises fears for

the survival of democracy itself. Parts of the population could perceive the

upheaval triggered by peak oil "as a general systemic crisis." This would
create "room for ideological and extremist alternatives to existing forms of

government." Fragmentation of the affected population is likely and could
extreme cases lead to open conflict."

The scenarios outlined by the Bundeswehr Transformation Center are drastic.
Even more explosive politically are recommendations to the government that
energy experts have put forward based on these scenarios. They argue that
"states dependent on oil imports" will be forced to "show more pragmatism
toward oil-producing states in their foreign policy." Political priorities
will have to be somewhat subordinated, they claim, to the overriding concern

of securing energy supplies.

For example: Germany would have to be more flexible in relation toward
foreign policy objectives. It would also have to show more restraint in its
foreign policy toward Israel, to avoid alienating Arab oil-producing
Unconditional support for Israel and its right to exist is currently a
cornerstone of German foreign policy.

The relationship with Russia, in particular, is of fundamental importance
German access to oil and gas, the study says. "For Germany, this involves a
balancing act between stable and privileged relations with Russia and the
sensitivities of (Germany's) eastern neighbors." In other words, Germany, if

it wants to guarantee its own energy security, should be accommodating in
relation to Moscow's foreign policy objectives, even if it means risking
damage to its relations with Poland and other Eastern European states.

Peak oil would also have profound consequences for Berlin's posture toward
Middle East, according to the study. "A readjustment of Germany's Middle
policy … in favor of more intensive relations with producer countries such
Iran and Saudi Arabia, which have the largest conventional oil reserves in
region, might put a strain on German-Israeli relations, depending on the
intensity of the policy change," the authors write.

When contacted by SPIEGEL ONLINE, the Defense Ministry declined to comment
the study.

- --

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