13 May 2009

It is not unthinkable that we may soon say goodbye to the era of 1500 mile Thai rice, 3000 mile Australian lamb loin chops, 4000 mile New Zealand strip loins, 9000 mile Namibian seafood, and 10,000 mile Norwegian Salmon Fillet in Cold Storage and NTUC Fairprice. Why? Because triple-digit oil prices are going to drive up transportation costs to such an extent that it will be more sensible and affordable to grow our own food. Distance is going to matter again and globalization - the economic integration of nations through unrestricted flow of goods and services - will be reversed with the end of cheap oil.

What will we eat? Our food security is at stake and what is the Agri-Food & Veterinary Authority of Singapore (AVA) doing about it? Their key strategy is to diversify by sourcing from countries as far away as Namibia and Chile. Will this work? No because it still depends on oil for transportation and food producing nations will move to curb exports as we witnessed in 2008 when high food prices forced governments to take action to quell local anxieties; therefore, it is important to substantially increase local food production to guarantee uninterrupted food supplies. Regrettably, AVA is not pursuing the self sufficient route.

Jeff Rubin, chief economist at CIBC World Markets, has written a timely book about peak oil and the end of globalization. It deserves our attention because Singapore's economy is so dependent on trade that we are highly vulnerable to oil shocks. Unlike the 1970s, the next oil shock will be permanent without any recovery in sight - a permanent recession caused by a relentless decline in global oil production. What is worrying is that the Singapore government does not appear to have any detailed contingency plans for peak oil. My email queries to government ministries have only elicited standard template replies like the following:

From: Ministry of Trade and Industry

With no indigenous energy resources of our own, we are price-takers and dependent on global markets for our energy resources. Thus, an essential part of our energy security strategy is to diversify our sources of supply, and in the long run, to diversify our fuel types. We have decided to pursue the import of LNG from 2012. We are test-bedding new and renewable energy technologies, and are keeping a watching brief on emerging energy technologies that may become viable for Singapore in the long run.

We would like to thank you for your constructive feedback.
Many Singaporeans will be in for a rude shock, which will be compounded by the current absence or lack of coverage of these issues by the local media, when they realise how long lasting this crisis will be.

Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization by Jeff Rubin (On Sale: May 19, 2009) Excerpts:

Cheap oil has been subsidizing the cost of fish. Just like WalMart and Tesco and big-box retailers around the world have been able to cut prices on almost everything by taking advantage of cheap shipping and cheap Asian labor, salmon went from being delicious local seafood to being another global commodity. Cheap oil gives us access to a pretty big world.

In the global economy, no one thinks about distance in miles– they think in dollars. If oil is cheap, it really doesn’t matter how far a factory is from a showroom or a farmer’s field from a supermarket. It’s the cost of other things, like labor or tax, that determines what happens where. An Atlantic salmon caught off the coast of Norway is destined to be moved around the world just like a ball bearing or a microprocessor...

....To get that salmon from the ocean to your plate takes a ridiculous amount of energy. Think of the fuel for the fishing boats, container ships and just- in- time delivery trucks; the energy to freeze and process the fish, to sell it in a supermarket (retail stores use almost as much energy per square foot as factories do, just on heating, cooling and lighting). We invest a lot more energy to get that salmon than we get out of it when we eat it, which in itself makes the fish a bad energy deal. Economics calls it a “diminishing rate of return.”

But it gets worse. A lot worse. All of that energy costs money, and energy gets more expensive just about every day. Not quite every day, of course– the recession that seemed to catch everyone by surprise in 2008 brought oil prices down in spectacular fashion. But even the deepest recessions last barely over a year. Those prices will be on their way back up soon enough. And however you want to measure the energy in that fish– calories, miles, joules, barrels of oil– it is inevitable that the price of fish is going to go up as well...

...what we had just recently seen in oil markets was a harbinger of the future trend in world oil prices. Those high prices (remember when $30 oil seemed alarmingly expensive?) were not some cyclical blip or coincidence of special factors but the beginning of what would prove to be a spectacular rise in oil prices driven by a fundamental imbalance between ever- growing demand and ever- tightening supply conditions...

In today’s oil market, the laws of supply and demand have been turned on their heads. Contrary to the basic precepts of economic theory, global oil demand grew faster during the run- up in oil prices than it did a decade earlier, when prices were roughly a fifth or less of what they were in early 2008. Far from killing demand, record high oil prices seemed to spur ever- greater consumption of oil. And instead of new supply gushing out of the ground, supply growth has basically stopped dead in its track in the face of no less than a fivefold increase in the price of crude. Despite every incentive to pump more, despite calls for OPEC to open the spigots and President Bush’s personal pleas to the Saudis, world production has hardly grown at all since 2005.

Suddenly the textbooks seem to be describing some other world than the one we live in...

...Get ready for a smaller world. Soon, your food is going to come from a field much closer to home, and the things you buy will probably come from a factory down the road rather than one on the other side of the world. You will almost certainly drive less and walk more, and that means you will be shopping and working closer to home. Your neighbors and your neighborhood are about to get a lot more important in the smaller world of the none too-distant future.

07 May 2009

After years of encouraging and pursuing a policy of higher birth rates for Singapore, I was a little surprised to read these comments by MM Lee at a dinner marking the Botanic Gardens' 150th anniversary in TODAYonline (see below). Apparently, even he understands our "sunshine limits to growth". So the question to ask, why does Singapore continue to pursue those very policies of economic and population expansion which will only lead to self-destruction due to the over-exploitation of the earth's resources?

We live in a momentous turning point in the history of human civilization where the converging crises of peak oil, climate change, overpopulation and a broken financial system threaten to throw us into an era marked by elevated levels of violence, crime, pestilence, famine and death. Sadly, many Singaporeans remain blissfully unaware of these impending events. I suspect this ignorance may be attributed in part to the frequent silence of the local media and our culture's over-reliance on the government to "fix it all".

The response of governments around the world has been the exact opposite of what they should be doing to tackle these problems. They have been adding fuel to the fire. Instead of downsizing and cutting back on growth and consumption, we have been urged to spend in order to stimulate the economy to meet growth targets. Replacing the GDP metric with the Genuine Progess Indicator is one of the first steps any country should take to measure true progress and wealth. Instead of "re-localising" our economy and our food and energy production to maximise our resilience to external shocks, we promote globalization and free trade to boost our production efficiency and capacity to the delight of the transnational corporations' bottom lines, but to the detriment of the environment, the middle class and the peasantry.

The Minister Mentor is right, we have outsmarted ourselves. So now i ask him, why is Singapore "still doing these stupid things?"

‘Humans are too clever’

MM LEE: I read an analysis ... This man said, for thousands of years of agricultural societies, the only source of energy was the sun which limits what they can grow, what animals can feed on the grass, what population you can sustain. Then came the industrial revolution ... (driven by) fire and coal. Coal is stored solar energy. Then they found oil; also stored solar energy..

Now ... they got this experiment to make two atoms collide and see whether they can generate power like the sun. So man is trying to generate mini suns, that can go on forever. But when you switch it on the whole thing burns up. So man has not found a way ....

And if we do find out what’s the way, will that solve it? I don’t think so. We’ve become too clever by far. If we find a solution to energy, the world will be overpopulated ... In 50 years, we are expecting 9.5 billion people from 6.3 billion now. You find a new energy source, we’ll become 80 billion people in the next century. Then what?.

So I think sooner or later, the human being must come to terms with the fact that this planet called earth can only sustain so much. You go beyond that, you destroy your habitat..

MODERATOR TOMMY KOH: Haven’t they learnt that already?.

MM LEE: If we’ve learnt that, why are we still doing these stupid things?


04 May 2009

A brilliant article which explains how and why the dominant economic paradigm is rooted in unreality and fantasy. The financial "wizards" and economic "high priests" of today rightly deserve to be castigated not only for the current worldwide credit crunch but also for our environmental woes. Our current model of relentless economic growth and accumulation of goods and capital is a recipe for ecological failure on a global scale. The economy is a subset of the ecosystem and not the other way round. Without a hospitable living environment, there can be no economy; hence, ecology precedes economy. I urge you to read the article in its entirety.

LINK: http://www.monthlyreview.org/090501-york-clark-foster.php

An essay mentioned in the article,“Economics Needs a Scientific Revolution,” can be found here: LINK