Destruction Of The Third World And Phantom Carrying Capacity  

Posted by Big Gav

Some of the reports about electricity outages and fuel shortages in countries like Nicaragua, Zimbabwe and Indonesia have me wondering if the drop over Duncan's Olduvai Cliff could actually occur in those countries that have insufficient energy resources of their own and not enough money to buy fuel from elsewhere.

For the past three weeks, thousands of motorcycles and cars have been queueing for petrol and diesel at pumps across Indonesia as the country faces a shortage induced by record global oil prices. So acute is the shortage and so desperate were some vehicle-owners that they took to sleeping overnight at the stations to ensure their tanks were filled when supply arrived.

The shortage criss-crossed the vast archipelago, disrupting public transport in provinces beyond the main island of Java, where mini- buses, ferries and boats ran out of fuel, leaving workers and travellers stranded. In Sumatra, transport on the strategic Jambi river remains at a standstill. Fishermen in the neighbouring province of Lampung are unable to put out to sea.

The idea that third world fishermen will no longer be able to afford diesel for their fishing boats at some point along the depletion curve does make me wonder just how quickly food shortages (or more bluntly, famines) could come into being once "fish acreage" (as William Catton dubbed it) is no longer available to them (assuming the fish population doesn't die off first, of course).

In one of the periods that Haloscan was working today, I saw some good comments from Jim Burke on The Oil Drum's weekend open thread about demand meeting available supply and using the Irish potato famine as an example.
I have been thinking about the observation made by one of our economist friends, his “pet peeve,” that by definition demand cannot exceed supply. I would like to apply this idea to the great potato famine in Ireland.

As we know, in 1849 a blight destroyed much of Ireland’s potato harvest and of the 8 million Irish, a million starved to death and 3 million immigrated. The English landlords have been heavily critisized for exporting food to England, even while their tenants starved.

Now I see that what was actually happening was that food prices went up, the Irish couldn’t pay, so the food (by necessity) was exported to where people could pay. High prices created demand destruction.

Therefore, the fact that Irish died off is irrelevant. The fact that matters is that the demand for food decreased dramatically in Ireland, and so landowners sold the food to those in England, where demand stayed strong (because the ability to pay was strong).

One question that arises from this is - what would have happened if the Irish were able to nationalise their remaining potato supply ? Would the famine have affected England as well ?

Moving on to another topic, I like Jim's comment about depletion and global warming as well - I've always though Kjell Aleklett's quip that peak oil means that global warming won't be a problem a bit dubious.
In the post “Peak Oil & Climate Change,” July 14, you reprinted Kjell Aleklett’s rebuttal of IPCC’s projected climate change model. Aleklett’s article and accompanying graph showed IPCC’s oil & gas increasing at an exponential rate throughout the 21st century; with ASPO’s model superimposed over it.

The message, which I had internalized since I first saw it in an ASPO newsletter, is that climate warming projections are overblown because of peak oil. Therefore, I had stopped worrying about climate change. Unfortunately, Aleklett misrepresented IPCC.

IPCC’s actually model (see Dave’s post on that comments page) differs from Aleklett’s rendition. IPCC showed oil & gas peaking in 2025, and decreasing to a fraction by century’s end. The rest of the exponential growth is made up by COAL; Not oil and gas.

I am really disappointed in Aleklett, and the ASPO newsletter, for misrepresenting IPCC’s position and diverting attention from an extraordinary problem. Aleklett is correct is stating that shifting reliance upon coal would be “disasterous,” but his actions undercut thinking and potential action on the subject.

We must shift our attention from peak oil and gas (which is increasingly obvious and understood), to “peak coal” and what can be done to avoid the disasterous shift to reliance upon strip mining coal to substitute for the missing oil and gas in our energy future.

2 comments

I think one part of Indonesia's problem is that they still subsidize gasoline purchases. As classic economics instruct us, a subsidy can artificially raise consumption or in this case prevent the necessary demand destruction. From what I have read, the Indonesian government spends billions on oil purchases to meet the higher level of domestic demand.

Yes - they do subsidise fuel - however as they were a net oil exporter until very recently that actually made sense in that it was just a form of wealth redistribution within the country.

Now that's no longer the case market forces will begin to bite (the government initially, then everyone when the subsidy program collapses).

I'm not sure fisherman using diesel to go out and catch fish is artifical consumption though, and nor will demand destruction have pleasant consequences (as per the Irish example)...

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