German research -- 'peak oil is here'

[Paul Mobbs]

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

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


P.



http://www.greenbang.com/peak-oil-is-here-german-think-tank_15147.html

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. The 
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 to 
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 of 
modern society — from agriculture and transportation to medicine and 
communications — dependent upon oil, declining supplies could lead to a global 
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 oil 
production capacity could entirely disappear” by 2012. Such an energy 
shortfall could lead to food shortages, regional breakdowns in security and a 
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 officials, 
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 when 
you see it through a rear view mirror, and by then an alternate resolution is 
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.




http://www.spiegel.de/international/germany/0,1518,715138,00.html

'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 when 
global oil reserves pass their zenith and production gradually begins to 
decline. This would result in a permanent supply crisis -- and fear of it can 
trigger turbulence in commodity markets and on stock exchanges.

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

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 irreversible 
depletion of raw materials. It warns of shifts in the global balance of power, 
of the formation of new relationships based on interdependency, of a decline 
in importance of the western industrial nations, of the "total collapse of the 
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 be 
in draft stage and to consist solely of scientific opinion, which has not yet 
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 show 
how intensively the German government has engaged with the question of peak 
oil.


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 Climate 
Change (DECC) is keeping documents secret which show the UK government is far 
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 develop 
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 
implications.

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 will 
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 those 
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 nations 
in the international system is growing. These nations are using the advantages 
resulting from this to expand the scope of their domestic and foreign policies 
and establish themselves as a new or resurgent regional, or in some cases even 
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 a 
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 energy 
market. "The proportion of oil traded on the global, freely accessible oil 
market will diminish as more oil is traded through bi-national contracts," the 
study states. In the long run, the study goes on, the global oil market, will 
only be able to follow the laws of the free market in a restricted way. 
"Bilateral, conditioned supply agreements and privileged partnerships, such as 
those seen prior to the oil crises of the 1970s, will once again come to the 
fore."

# Market failures: The authors paint a bleak picture of the consequences 
resulting from a shortage of petroleum. As the transportation of goods depends 
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 example 
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 chain. 
"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 equally 
possible in all regions before the onset of peak oil," says the study. "It is 
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 were 
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 "in 
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 the 
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 Russia's 
foreign policy objectives. It would also have to show more restraint in its 
foreign policy toward Israel, to avoid alienating Arab oil-producing nations. 
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 for 
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 the 
Middle East, according to the study. "A readjustment of Germany's Middle East 
policy … in favor of more intensive relations with producer countries such as 
Iran and Saudi Arabia, which have the largest conventional oil reserves in the 
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 on 
the study.


- -- 

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