GLOBAL RESOURCES ANALYSIS
INTRODUCTION | LETTER
This is an online text only copy (so without the illustrations) of the first version of the Global Resources Analysis report for review (made easy accessible by a shortened and an extended index). The GRA report has been released Augustus 17 in Washington. The GRA report covers the influence on the economy and governments of both the Energy Crunch and Credit Crunch (which both have taken the lead in the daily news worldwide).
To describe the whole report in an one long nutshell line: more people on earth, more purchase power on earth, less energy on earth, less resources on earth, higher prices for everything everywhere, negative economic growth in the whole Western World, lower economic growth in the Emerging World and higher economic growth in the energy and commodities surplus nations of Former USSR, Middle East and Africa.
Demand up, supply equal or down: prices up. When price rises overgrow the economical growth, this always causes stagflation (smaller economies). Stagflation has direct impact on almost all market driven sectors. Stagflation has also a huge indirect impact on the (not direct market driven, but yet by the market economy feed) budgets for government, education, science and healthcare. Smaller economies always have smaller budgets.
The Global Resources Analysis report will be published in a time in 2008 where oil prices have rising to around/above $ 130 (even in the traditional due less demand by lower oil prices characterized month May), CNN's her main themes are the Global Food Crisis, the Global Energy Crisis and the Global Credit Crisis, U.N. Secretary-General Ban Ki-moon has said that the world must urgently increase food production to ease sky-rocking prices and that he is pledged to set up a task force for this (link to article on bloomberg.com) and China is looking to buy massive agricultural soil for their own food and meat production in both Africa and South America (link to article on ft.com).
Also in a time when politicians don't really understand the energy situation yet: Senator Clinton thinks that there is an energy complot set up by the BigFive (but Exxon for example only controls 3% of global production). Senator McCain thinks that giving a fuel tax holiday will turn global energy markets around (more demand, will give lower prices?).
The real oil price increase will come when China and India will stop subsiding national oil consumption (and they will for sure: it has become to expensive for both governments). World oil prices then will get a severe boost to above $ 250 in a very short period. Subsidizing is equal to rationing and when this supply limitation disappears is the roof of oil consumption in these emerging markets away. Oil consumption will increase tremendously, like two breaking dams the same time feeding one giant new oil consumption wave. Subsidizing equals rationing equals lower demand.
In China each 3 months 2.000.000 new cars and 600.000 new trucks hit the road (and thereby also the gas stations). The impact of emerging markets on the global resources markets has no historical reference: never in economical history entered 3.4 billion customers high prosperity levels in only 10 years time. Cumulative (accelerating/pandemic) growth is something all datamodels doesn't have foreseen.
Getting daily fuel in China is real hard (big lines for gas stations everywhere). Stopping subsidies (equals liberation of oil distribution to the free market of demand and price) will be like feeding pure oxygen into the global oil demand fire of 40% of the world population which gets daily more and more purchasing power. China has 5 times the population of the US, still it currently uses only 1/10 or US oil consumption. This will change rapidly. Production never will be able to feed this huge demand increase.
One line says it all: Indonesia considers leaving OPEC this year, simple by the fact that the nation has become a net importer of oil. An other signal is that the Paris based and always very traditional IEA (International Energy Agency) this week (after even till this year denying such thing as PeakOil) published her first emergency signal focused report, where she forsees 'entering a phase with a new energy world order' due the fact that 'supply no longer will match demand anymore' (link to article on cnn.com).
Both republicans and democrats (but also leaders in other nations) don't understand that's there is a global energy crisis growing in a very fast speed. The nations in Emerging Markets have worked themselves in last years to their place in the economical sun and this accelerates the global energy demand severely. Demand that (more and more) simple outstrips the declining global supply. The oil demand of 'the old world' simple doesn't effect prices anymore as it did: these days the demand out of the new world dictates the prices, and they have the money to buy it.
The leaders of the new energy surplus nations start to understand the consequences of the energy crisis. The leaders of the old energy deficit nations don't understand it yet. When oil majors by oil price levels of above $ 100, their mega profits earned by these high prices spend on re-purchasing own stock instead of investing it in new oil exploration, you know something is going on. The founding family of Exxon has last week criticized the Exxon board on this (link to article on ft.com) with the message: if oil is running out, do what you're paid for: go explore other energy sources: adjust to new situations or give you seat to someone who can do that.
The intensity of the energy problem diverges per global region. China has only 12 days of coal (70% of her energy demand is generated by coal) in stock and their coal inventories decline currently with a 3 days per month rate (link to article on news.com.au), bringing them in serious trouble within 4 months and give sky-rocking coal prices worldwide: they will buy anything for any price.
Example: The Chinese steel manufacturers signed mid June their new iron ore purchase contracts with a 96.5% price increase from their previous purchase price. The same will happen with the price of iron cooking coal: the price bandwidth is set, and power steam coal will follow the price increase of iron cooking coal like it always has done (link to article on ft.com), driving both iron and power prices at least to 200% of current levels.
South Africa is already a full year in severe energy shortages (power distribution is simple not 24/24 per day available). The severe price rise of coal (much more intense than oil) is the forgotten issue in almost all global media. Coal is becoming in rapid speed the most expensive power generation option by the worldwide large increasement of coal fired power plants. Coal generated power will become even more expensive than oil generated power, due the excessive growing global coal demand.
The North Sea oil output peaked at 2.8m barrels a day in 1999, and last year this output was down by almost 60% on that peak. Draining the West European economies again with wealth export to foreign nations by their energy imports, like the energy imports also severely already drain the US economy. Households, companies and governments are not only facing expensive fuel prices, but also strongly (2 till 4 times) increased electrical power prices.
On May 29, the US Department of Energy released a report that concludes that global oil exports in 2007 have lowered with 2.5% (in a year that crude prices has risen 57%), making PeakOil for the energy deficit Western World to an official US governmental statement (link to article on wsj.com). On the other hand has Saudi Arabia's internal consumption last year grown with 23% to 2.3 million barrels a day.
This growing energy deficit has huge effects. Recent history (last 150 years) has shown that Energy = Prosperity = Freedom = Democracy (and also reverse/opposite: Less Energy = Less Prosperity = Less Freedom = Less Democracy). This is one of the conclusions of the Global Resources Analysis report.
Even it's still a draft version, the report is already read more than 1.125.000 times since its international RFC release two months ago in April. This number made it already the most important and most international used report of 2008. Although the attached version is still this raw/draft version (the final draw up will be done in the next weeks) I hope you'll enjoy it and learn a lot of it in terms of economic and technological perspectives. Supporting website, videochannel and imagechannel are also in production.
There will be a world media tour of several teams of economic / political / environmental / development specialists (World Energy Tour), followed by a global seminar (World Energy Summit). There will be a global broadcasted Live Energy festival. In 2012 both the release of a documentary and a feature movie (as the next phase on the An Inconvenient Truth story).
Global Resources Analysis will be published in local languages in almost any country of the world. Several documentary and feature film makers already use it as their script reference. Many universities have put it on their advised booklists for economic, societal and/or governmental programs and use it for special PeakEnergy / PeakEverything lectures and seminars.
Many media are following the successful 'energy special' and 'food special' formula of CNN. Many universities are planning 'global resources', 'global food' and 'global energy' theme days under popular names like 'war on food', 'war on energy' and/or 'war on resources'. Almost every city is initiating a local energy department. Many cities also initiate a food department (like the all already have water departments). Almost each government is planning the initiation of a special dedicated energy department.
The Global Resources Analysis report describes the PeakOil / PeakCoal related issues/effects/dangers for companies, households, economies and thereby governments. What will happen with economies (and therefore also with both households and governments that are funded by these economies) if cheap and abundant oil has gone?
That PeakOil will change completely our current completely on cheap energy based economy is evident. You can start to address both internal (first line) and external (second line) PeakOil related issues/effects/dangers that threatens jobs and investments, just by circulation of this report. Free circulation must be done unchanged. Changed/customized circulation (with an own logo/introduction/foreword and even with own layout/images/text changes could be done low quality digital (fast/cheap) or in high quality print (impressive/representative).
An illustrated copy of the full report, can be downloaded from http://www.planck.org/downloads/Global-Resources-Analysis.pdf.
With just a simple circulation/forward of the report, you can reduce the internal/external effects of these PeakOil related issues, impacts and dangers. This way severely downsizing the operational risks outside the organization in times of PeakOil / PeakCoal / PeakEverything (also called PeakX).
I hope you like the report, feel free to circulate the report digitally to anyone you wish to do so, or put a copy for download on the web. If you want production of customized layouts/versions, or just the copyrights for own printed/digital customized versions, than contact me so that I can arrange this for you.
See this draft as a RFC (Request For Comments). I really like to receive your feedback/comments (also those of the people you maybe forward this report to), so that the Global Resources Analysis report improves itself (grows further) during time.
Gijs B. Graafland.
P.S. As an example (of both practical impact and the specific solution) of a by PeakOil caused change: Take a quick look at www.growindus.com (fresh food production within/nearby cities, in/after PeakOil).
Author: Gijs Graafland
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