Peak oil : Does it matter?


Richard Moore

From: Jim Macgregor
Date: Sun, 16 Oct 2005 07:04:59 EDT
Subject: 'Peak Oil'
To: •••@••.•••


I've read David McGowan's article, Beware the 'Peak Oil'
Agenda, several times and I'm sure most of your subscribers
will also have given it considerable thought.  I believe it
very important that you air your own thoughts on this as you
have based much of your projected scenario for the world as
being due to a genuine Peak Oil situation.

best wishes,


Hi Jim,

Thanks for your observation.

I do currently have a paragraph in my Apocalypse article that
starts off: "Peak oil is real." But it turns out, as the
investigation proceeds, that the reality or not of peak oil is
irrelevant. In both the short term and the long term, this
issue is trumped by other issues.

In the short term, the issue is trumped by the fact that a
decision has been made, by financial and oil elites, to put
the squeeze on us - using oil shortages, and 'peak oil', as
excuses.  Any shortage that now exists is a result of human
policy, not resource scarcity - policies about how many
refineries to build, and how much oil to extract.  See for
example our posting of Oct 12:
   "Oil : Internal memos : intentional shortages"

We are getting clear signals in the media that fuel prices
will rise further, and that interest rates will be raised to
ease the resulting inflation. An attack on Iran seems still to
be in the works, and that is very likely to disrupt oil
production, and even more shipping, in the region. That would
bring another major spike in shortages and prices, most likely
eclipsing what we've seen so far.

Overall, I think we need to interpret these events as an
engineered oil shock, like the one in '73. In that case, the
most significant outcomes had to do with curtailment of
economic growth, the beginning of the highly profitable
third-world debt phenomenon, and the establishment of the
petrodollar system - which salvaged the failing dollar and
restored it to financial dominance. These were consequences,
major consequences, in the realms of finance and geopolitics,
and they were of more fundamental importance than the simple
fact of increased oil industry profits.

In our current situation we can expect similar consequences:
reduced economic growth globally, major negative impact on
third-world economies and debt burdens, and an even more
dominant dollar. But besides those, we have something else to
worry about this time around: an over-inflated global economy,
as exemplified by excessive personal debt, and over-extended
mortgages. On those occasions when I watch television, it
seems that every other advert is some financial institution
inviting us to go further into debt, to ride the housing

An oil shock, plus an interest rate hike, plus a bubble
economy, adds up to trouble, big trouble. There's a reason why
economists use the term 'bubble' to refer to this kind of
over-extended economy: once it stops expanding, it doesn't
just calmly deflate - it bursts and collapses.  In 1929 we had
a bubble economy. Everything was expanding in the Roaring
Twenties, and everyone was playing in the bubble stock market,
on margin. Joseph Kennedy (JFK's father) remarked that he knew
it was time to pull his money out of the market when his
shoeshine boy started giving him investment tips. In that
case, all it took was an interest rate hike to burst the
bubble, bring down the house of cards, and lead the way to the
Great Depression.

Today we face a double whammy: 1973 + 1929. As oil prices and
interest rates climb, consumer spending will go down, other
prices will increase as suppliers and shippers pass on their
own fuel increases, businesses will have to let people go due
to both increased costs and reduced demand, unemployment will
rise, and those on the margins will begin to default on their
mortgages. As these houses begin to go on the market, the
prices start to fall, and by then all the speculators will be
scrambling to get out, glutting the market still further.
Those who can still make their payments, but who would like to
sell, are stymied: they owe more than their house is worth.
They would need to come up with cash, to add to the sale
price, in order to pay off their mortgage.

The housing market is only one example of a bubble in our
economy. There are the international financial markets,
involving trillions of dollars, and based largely on
speculative instruments, and there are the stock markets. The
whole economy is one big bubble, held together by the
anticipation of continued growth, and a major oil shock plus
interest rate hike is bound to cause it to collapse.

In the short term then, it is economic collapse we need to
worry about, rather than peak oil.

In the long run, peak oil is trumped by a broader issue: the
general unsustainability of our civilization. Even if oil
would flow forever, we can't keep living as we are as a
society. We are abusing and over-using all of our resources:
water supplies, soil, fishing stocks, etc., and we are
poisoning our nest: with pollutants, genetically modified time
bombs, greenhouse emissions, food additives, and more. Peak
oil or no peak oil, either we transform our societies, or we
face a major collapse of of our whole civilization, from many
different causes.

Earlier, I believed that this oil shock scenario was intended
to manage the problem of imminent peak oil. Now I've come to
the conclusion that the scenario is aimed at managing the
bigger problem of unsustainability. From various indicators,
including the fact that 'depopulation' is considered by U.S.
planners to be high priority 'security' issue, it appears that
the plan is to bring about a very severe economic collapse,
one that will lead to large scale die-offs, primarily in the
third world, and one that will lead to economic crisis in the
rest of the world, enabling the regimentation of society. By
reducing world population, and putting the survivors under an
iron fist, ruling elites, it appears, will have the means to
manage the collapse as they see fit, deciding who will make it
through to the other side, and how resources will be

An attack on Iran, which is likely to cause oil havoc, would
be an ideal way to bring about such a severe collapse, and
perhaps that may be the primary motivating factor for the
impending attack. Motivation comes from expected outcomes, and
apart from all-out nuclear war, economic collapse seems to be
the most significant expected outcome of this particular war.

For us, it seems to me, all of these circumstances indicate
that what we need to be focusing on is the question of how we
can gain the power to transform our societies. Peak oil or no
peak oil, planned genocide or no planned genocide, if we don't
gain that power we have disaster ahead of us, of one flavor or

Waiting until things get worse will not make our task any
easier. The sooner we face this question and start doing
something about it, the better off we'll be. In that sense,
we've long passed the point of diminishing returns as regards
'analyzing the problem'. All we really need to know is that
our societies are unsustainable, and that this problem cannot
be productively addressed within the context of our current
political systems. After that, we can find only redundant
details in further analysis.



For those of you who continue to have an academic interest in
the narrow question of peak oil, here are some articles about
abiotic oil:
    13 Oct - * David McGowan : Beware the Peak Oil Agenda  *
    16 Oct - Abiotic oil : hydrocarbons in  ancient rocks
    16 Oct - Abiotic oil : The mystery of Eugene island 330
    16 Oct - Abiotic oil : a dissenting view
    16 Oct - Abiotic oil : a scientific inquiry
    16 Oct - Abiotic oil : Col. Prouty : primordial oil?
    13 Oct - Jerry Mazza : Abiotic oil 


"Apocalypse Now and the Brave New World"

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