Singapore Peak Oil

Where is Singapore's White Paper on Peak Oil? Nonexistent.

Where is Singapore's Peak Oil Task Force? Nonexistent.

On the contrary, the Ministry of Trade and Industry seems to think that peak oil will not be around for the next two to three decades. They also wrongly assume that with "more exploration and improvements in extraction technologies, substantial new reserves will be added."

The economic benefits of living in a very stable world - meaning we're not at war with China - that means that we can enjoy a lot of benefits of having them manufacture all our stuff. We're used to getting all of our household goods now from 12,000 miles away. They're "Made in China". You know everything from frying pans to underpants. What's going to happen if those supply lines to China are interrupted?...We're going to have to downsize and downscale everything we do...The age of the 3,000-mile Caesar salad is coming to an end. We're gonna have to grow more food closer to where we live....

Video Link

Singapore's Agri-Food & Veterinary Authority (AVA) is responsible for our food supply. Their mission:

To ensure a resilient supply of safe food, safeguard the health of animals and plants and facilitate agri-trade for Singapore.

Their goals:

• Ensure a resilient supply of safe and wholesome food.
• Safeguard the health of animals, fish and plants.
• Be a centre of excellence for tropical agritechnology development and services.
• Facilitate trade in food and agricultural products.
• Develop a cohesive, innovative and professional workforce.
• Build a positive image and enhance community outreach.
• Promote animal welfare.
• Optimise the utilisation and return on resources.
• Leverage on IT for efficient service delivery and organisational development.

Sadly, what is not included in their goals is the need to strive for self-sufficiency in food production.

According to AVA's account, we were self-sufficient in the 1970s when it came to the production of poultry, eggs and pork. We had 14,000 hectares of farmland back then. In the 1980s, unfortunately, large areas of agricultural land were cleared to make way for housing and industry and today we are down to 764 hectares of farmland - 95% of farm area gone.

I inquired NParks about peak oil and food production recently. As they were not responsible for our food supplies, they forwarded my inquiries to AVA and I received the following response:


I thank AVA for their reply but I am troubled with the fact that they wrote "Singapore does not intend to achieve self-sufficiency through local food production".

Surely AVA must be aware of how dependent our food supplies are on crude oil and natural gas. Crude oil, which has probably peaked in production since 2005, is used to run farm machinery, to manufacture pesticides and herbicides, to package food, and to fuel trucks, ships and planes which transport food over thousands of miles to unload their cargo here.

Conventional natural gas, a major feedstock for use in fertilizer production will peak between 2018 and 2020 according to some estimates. Modern industrial agriculture really is indirectly the eating of fossil fuels. Our current system of energy-chemical-intensive farming is unsustainable and will be short-lived.

Does AVA not realise the adverse ramifications that dwindling fossil fuels will have on global food production? How then can we not strive to be self-sufficient in food production? I am baffled. As difficult as it is, we have to try one way or another and perhaps learn from the Cubans who successfully carried out organic sustainable urban farming when they had their own artificial peak oil after the collapse of the former Soviet Union. See video below:

(One of the first steps to food self-sufficiency is to deal with the overpopulation problem here in Singapore.)

As food supply is a matter of national security, I believe the government should not dismiss the idea of food self-sufficiency just because it is "commercially unviable" or "economically unfeasible". We don't outsource our national defence to mercernaries or foreign armies, so why should we be so dependent on foreigners for 90% of our food supplies? There are five aspects to our nation's Total Defence concept: Military, Civil, Economic, Social and Psychological Defence. What is sorely lacking is Food and Energy Defence.

Some have argued that we need not worry because Singapore is rich enough to outbid other food importing nations to secure our food supplies. This view is wrong for two reasons:

1) Money or the system of finance and banking that we have now will become highly unstable and unreliable when the world economies grind to a halt and contract due to peak oil. It is likely that paper currency and dollars will no longer be accepted as payment for international trade because buyers and sellers will realise that they do not hold any life-preserving or life-enchancing value when compared to tangible and material goods such as food and oil. Commerce and trade will be done via barter. See reports here and here.

2) Resource nationalism and the hoarding of commodities will be common in future geopolitics. No government wants to see food unrest and riots in its own country and one way to prevent it is to ban food exports to satisfy local demand. In fact, we have already witnessed it in recent months where Indonesia, Cambodia, Kazakhstan, Vietnam, and India have banned grain exports.

I think food shortages are very likely to occur here in Singapore within the next 10 years. When a nation with a population density of 6,500 per sq km (one of the highest in the world) goes hungry, social order will get very ugly. I just pray that I am wrong.

Related blog posts:

http://singaporepeakoil.wordpress.com/2006/08/25/peak-oil-and-food/

http://sgentropy.blogspot.com/2008/06/singapores-population-to-plunge-by-90.html

http://sgentropy.blogspot.com/2008/06/singapores-food-supplies-vulnerable-to.html


Further information:

How Peak Oil Could Lead to Starvation

Threats of Peak Oil to the Global Food Supply

Why Our Food is so Dependent on Oil

Eating Fossil Fuels

Many people came to think that it was money that made the world go round, but in reality it was the underlying supply of cheap energy - much of it coming from oil — Colin Campbell

Crude Awakening is an award-winning documentary film about peak oil. You can view it below from Google Video or download it using BitTorrent.


Some central quotes from Colin Campbell in the documentary:

"There isn't a company quoted on the stock exchange that doesn't tacitly assume the business-as-usual supply of cheap oil. When that isn't there anymore, that means that virtually every company is overvalued on the stock exchange. And as the financial community recognizes this - well, that might trigger some kind of overreaction and a stock market collapse. I think it's very likely.

"I won't be very surprised personally if it doesn't trigger another great depression comparable to the one of the 1930s, if not worse, because this one is imposed by nature rather than being a speculative bubble.

"We are facing some sort of unprecedented, unparalleled situation and that explains why it's so difficult for one to really accept it - one thinks there has got to be a solution. It's somehow contrary to our mindset to think about these things. We just don't like to do it....it's doubly hard because it really has never happened before. It's a strange issue of mindset and attitude and experience and behaviour that somehow leaves us so unprepared for this situation.

"We identify a species called hydrocarbon man - and lives on the strength of all of his oil - well, his days are definitely numbered. Whether mankind or Homo sapiens as a species altogether will carry on living some different, simple way - that's another question." Video Link

A frightening article about what peak oil means for our societies. Do our ministers realise where we are heading? So what have they done to prepare Singapore for peak oil? Let's see: Integrated Resorts, Singapore Grand Prix, investing in UBS, Citigroup and Merill Lynch, 2010 Youth Olympics, target population of 6.5 million....er...huh, go figure...

By Nicolas van der Leek (Nick)

http://english.ohmynews.com/articleview/article_view.asp?at_code=434714

...Say goodbye also to the services that rely on airlines, such as courier companies. This means FedEx and UPS, Say goodbye, too, to the likes of Amazon.com.

Giant scale operations -- from air travel, to farming, to industry (think General Motors) -- will scale down drastically.

This represents an implosion in world tourism, which means world spectacles like the FIFA World Cup and the 2012 Olympics are going to be beyond reach for 90 percent of consumers. This also has an impact on all those services that survive on international tourism -- entire hotel chains, car hire companies, restaurants and the like...

...We will see a stock market crash based around the realization (in markets) that not only is economic growth no longer logical, but depleting energy means breakdowns in all the financial architecture that was designed on top of it -- from property markets, to banks, to entire industries, including (of course) the auto and food industries. Obviously, when entire banks fail, so will capitalism and what remains of the financial apparatus.

Money will have little or no value in the future, and commerce will be done via barter, and probably in a disorderly manner. Agriculture will become a big industry, along with other forms of resource management (mining, forestry, etc.).

Disorder

It goes without saying really that all these transitions are likely to be associated with unpleasant levels of public disorder. It is likely that around the world authorities will struggle to maintain law and order. Governments will have a hard time staying relevant and of use to suddenly impoverished mobs. These struggles will place additional strain on those Cheap Oil Relics that survive, for example municipal services and roads. Who will maintain these in a world that can no longer afford very much?

http://english.ohmynews.com/articleview/article_view.asp?at_code=434714

Robert Hirsch, principal author of the Hirsch report and Senior Energy Advisor, on CNBC. Video Link

Can you think of any problem, on any scale, from microscopic to global, whose long-term solution is in any demonstrable way, aided, assisted, or advanced, by having continued population growth at the local level, the state level, the national level, or globally? ---Albert Bartlett

If you have been following the news, you should be aware that Singapore ministers keep harping on the fact that our birth rates are too low, and that our population needs to keep growing for us to prosper economically. I wonder, do they have any understanding of the term "carrying capacity"? If we need more people to maintain economic growth, what happens when we hit 6.5 million people in 20-30 years? Do we aim for 10 million next? And when we reach 10 million, do we target 20 million? Our government's blind and relentless pursuit of growth is shortsighted; Nature is not going to accommodate all of us.

Singapore's ruling party, the PAP, prides itself on being far-sighted:

We operate with a very long-term horizon. No problem is too remote just because its effects may only be evident in the future. We CAN SEE AHEAD to guide our people along the best way forward.

http://www.youngpap.org.sg/abtus_vision.shtml

This statement is laughable. How can they operate with a "very long-term horizon" when the subjects of peak oil, energy depletion, carrying capacity and limits to growth are absent from their publications and speeches? The word "sustainable" may be used quite often in the government's publications, but they are merely paying lip service to true sustainability as their policies betray their line of thought. Our ministers’ lack of understanding of sustainability is a serious problem.

What is carrying capacity?

Ecologists define 'carrying capacity' as the population of a given species that can be supported indefinitely in a defined habitat without permanently damaging the ecosystem upon which it is dependent.

http://dieoff.org/page13.htm

Due to peak oil production, our foreign food sources will become increasingly unreliable in years to come. Industrial farming will peak and their outputs will be greatly reduced. Our food transport systems will be disrupted by soaring fuel prices, protests and strikes. What do we do? We need to grow more food here at home. But the question is, how many people can we feed on our own?

Here is my feeble attempt to calculate the carrying capacity of Singapore. As there are many complex variables (water, food, pollution, sanitation, soil fertility, etc.) which affect the carrying capacity of a habitat, I have greatly simplified my calculations and will only touch on the food production/consumption aspect of it. My method is simple: divide Singapore's land area by the minimum land area required to feed a person.

Singapore land area: 682.7 sq km = 168,698 acres

Acres per person needed for a standard American diet: 1.2 acres to 2.11 acres

Acres per person needed for a largely vegetarian diet: 0.3 acres to 0.6 acres

If Singapore adopts a standard American diet, our carrying capacity would therefore be between 80,000 and 140,000.

If we adopt a largely vegetarian diet, then our carrying capacity would be somewhere between 280,000 and 560,000.

In reality, if we attempt to pursue self-sufficiency, our true carrying capacity is probably much lower than the numbers given above since most of the land in Singapore is not fit for crop cultivation because of our tropical soil and high degree of urbanization.

The possibility of Singapore's population plunging by more than 90% in the years ahead is not out of the question. Rome, the largest city of the ancient world, had a population of one million at the height of the Roman empire and dropped to 20,000 by the 14th century - a plunge of 98%. Thomas Homer Dixon argued in his book, The Upside of Down (available at the National Library), that the ultimate cause of the Roman Empire's collapse was due to diminishing energy returns on investment, or as Joseph Tainter put it: diminishing returns on investments in social complexity.

Likewise today, Singapore is disregarding the axioms of sustainability outlined by Bartlett and others by exhausting critical resources foolishly in our pursuit of economic and population growth to keep Singapore "dynamic, vibrant, and beating" - all of which are unsustainable in the coming decades.

(Tainter’s Axiom): Any society that continues to use critical resources unsustainably will collapse.

(Bartlett’s Axiom): Population growth and/or growth in the rates of consumption of resources cannot be sustained.

To be sustainable, the use of non-renewable resources must proceed at a rate that is declining, and the rate of decline must be greater than or equal to the rate of depletion.

In 1989, Isaac Asimov, when asked about the population problem, said it well:

Moyers: What happens to the idea of the dignity of the human species if population growth continues at its present rate?

Asimov: It will be completely destroyed. I like to use what I call my bathroom metaphor: if two people live in an apartment and there are two bathrooms, then both have freedom of the bathroom. You can go to the bathroom anytime you want to stay as long as you want for whatever you need. And everyone believes in the freedom of the bathroom. It should be right there in the Constitution.

But if you have 20 people in the apartment and two bathrooms, no matter how much every person believes in the freedom of the bathroom, there is no such thing. You have to set up times for each person, you have to bang at the door, "Aren't you through yet?" and so on.

The same way democracy cannot survive overpopulation. Human dignity cannot survive it. Convenience and decency cannot survive it. As you put more and more people into the world, the value of life not only declines, it disappears. It doesn't matter if someone dies. The more people there are the less one individual matters.

Issac Asimov, quoted in A World of Ideas by Bill Moyers (1989)

We have to accept the fact that we are entering a phase of economic and societal contraction. The sensible question to ask is, do we contract in orderly fashion or in anarchy? Judging from the daily news and our ill-preparedness, my hunch is that it will be chaotic and ugly.

Singapore's Ministry of Trade and Industry (MTI) has a published a report (dated Nov 2007) on Singapore's energy policies. You can download it here: Energy For Growth - National Energy Policy Report

There are many things to commend about the report. It touched on the need to improve energy efficiency, reduce CO2 emissions, diversify energy sources, promote public transport and to control air pollution.

But to be blunt, it's better titled Energy For Unsustainable Growth because even though they keep repeating the word "sustainable", their policies really are UN-sustainable as they seem to have a total disregard for the axioms of sustainability outlined by Bartlett and others. Throughout the report, the impression given is that economic growth is always good, essential and limitless. Overpopulation was not touched on.

The core objective of our energy policy must thus be to secure Energy for Growth. (p.22)

If overgrowth in consumption and population are the root causes of our environmental concerns, then why do our policymakers continue to establish growth as the "core objective of our energy policy? Is more growth the answer to our problems? Does it make any sense at all? If smoking is causing you to have poor health, then the natural and logical thing to do is to stop smoking. If overgrowth is the problem, then non-growth or anti-growth is the solution.

Here's an analogy: Eating when one is hungry is satisfying and nourishing. Following our policymakers' logic, if eating is good for you then overeating must be better!

What does "grow" mean? What do you mean when you tell someone to "grow up"? Most people would agree that to grow means to expand; to increase; to gain. But an overlooked definition of "grow" which is more applicable to our economies and population is "to reach maturity".

Let's look at some other definitions of "grow":

American Heritage Dictionary: "to develop and reach maturity"

Merriam-Webster: "to spring up and develop to maturity"

Etymonline: Grown-up (adj.) "mature" is from 1633; the noun meaning "adult person" is from 1813

A child who grows up and reaches physical maturity is said to have "grown-up". If he grows any more, either taller or sideways, then it's a possible sign of ill-health. A "grown-up" continues to grow by developing knowledgeably and spiritually, not physically. Even if he or she develops physically with regard to muscle building, it should be obvious that even then there are limits as we cannot expect a bodybuilder to attain the strength of a gorilla or an elephant. There are, however, no limits to knowledge and creativity.

When our economy has "matured" to a certain stage, or when GDP reaches a certain level, it's time to say enough is enough - the economy cannot grow forever. There must come a point where we have to learn to be satisfied with our material achievements and move on to qualitative or spiritual development for the earth is finite in matter and energy and cannot satisfy all our physical wants. If owning a car makes you happy, will 10 cars take you to heavenly realms?

Now for the most disturbing part of the report:

World proven coal reserves are equivalent to 147 years at 2006 consumption levels, based on the British Petroleum (BP) Statistical Review of World Energy 2007. For oil and gas, proven reserves are estimated to be sufficient for only around 40 and 63 years of 2006 levels of consumption respectively. Nevertheless,oil and gas production is not expected to peak within the next two to three decades. With more exploration and improvements in extraction technologies, substantial new reserves will be added. Since 1980, globally proven oil reserves have expanded by 81 per cent, while proven gas reserves have more than doubled. (p.13)

This is so wrong I am astonished MTI even had this in the report. Compared to climate change, now I know why the Singapore government has paid scant attention to the peak oil problem - because they take BP's Statistical Review as gospel truth.

(Compare the Google search results of "climate change", "global warming" and "peak oil" in the .gov.sg domain. The results are 3000, 1560 and 3 respectively. Climate change and peak oil are related because they result from human dependency on fossil fuels.)

The current CEO of BP, Tony Hayward, disputes the peak oil theory and it was reported that he entered a wager with Kjell Aleklett of ASPO to bet that global crude production in 2018 will be greater than the current daily output of 85.5 million barrels per day. My bet's on Aleklett.

Let's review some points:

• Global oil discovery peaked in the late 1960s
• Since the 1980s, oil companies have been finding less oil than we have been consuming
• Of the 65 largest oil producing countries in the world, up to 54 have passed their peak of production
• Oil production from existing oilfields is declining at a rate between 3 and 5 percent while oil demand has been increasing at about 2% per year
• World oil production growth trends have been flat from 2005 to 2008
• The 81% increase in global oil reserves since 1980 are not "proven" or audited. The large increases in the BP report stems from the fact that BP quoted directly from OPEC members who gave them phony figures. Their REAL oil numbers are a state secret. OPEC members grossly overstated their reserves in the 1980s to increase their production rights.
• Improvements in extraction technology will not add substantial reserves since the cause is geological limits. If it's not there, it's not there. You can't create oil from thin air. The North Sea was developed by private companies using the best technology there is with no restrictions on drilling, yet oil production from those oil fields have been declining since 1999.
• If you factor in dramatic increases in coal usage to make up for oil and gas declines, taking into account also the Hubbert Peak phenomenon and the varying coal qualities and accessibility, Energy Watch Group predicts coal to peak in 15 years.

Sources:
http://www.energybulletin.net/primer
http://en.wikipedia.org/wiki/Oil_reserves#Middle_Eastern_reserves
http://en.wikipedia.org/wiki/Peak_oil
http://www.energybulletin.net/node/5655
http://www.energybulletin.net/node/29919
http://www.energywatchgroup.org/fileadmin/global/pdf/EWG-Coalreport_10_07_2007.pdf

Whoever wrote that part of the report is seriously disconnected from the real world. Note that this report was published in Nov 2007, when peak oil was already making its way into mainstream media. Seriously, who the heck wrote that paragraph?

The Singapore government is clueless as to where we are heading. We are sleepwalking into an energy crisis.

If geologist Jeffrey Brown is correct, the shit will hit the fan sooner than what most people anticipate - including the pessimists. According to his calculations, Mexico, the 3rd largest exporter of oil to America, will approach zero net oil exports by 2014. Meanwhile, Saudi Arabia (2nd largest oil exporter to America) have signalled that they would slow down their oil production capacity to preserve their oil endowment for future generations (a more likely reason is that they have peaked). The largest oil exporter to America, Canada, is unlikely to ramp up their oil extraction from tar sands fast enough to make up for the shortfall due to a peak in North American natural gas (an important factor in the extraction process). The next three largest oil exporters to America, Nigeria, Venezuela, and Iraq are not friendly and reliable sources. Can we say we are on the verge of Dark Ages America?

Meanwhile, GIC is investing, or should I say mal-investing, billions in dollars of Singapore's foreign reserves in American bank Citigroup, which will in all probability fold up when peak oil momentum gets underway; this is an unbelievable lack of foresight on the Singapore government's part.

With regard to the government's decision to go ahead with the Integrated Resorts, they will be go down in history as white elephants.

Export Land Model

It models the effects of the decline in oil exports as a result of the peak in oil production in oil exporting countries while at the same time domestic consumption increases in those same countries. This combination of declining production and increasing domestic consumption leads oil exports to decline at a far faster percentage rate than oil production itself is falling.

What The Export Land Model Means For Energy Prices

"What’s more important: the fact that global oil production is falling ... or that the oil exporting nations are cutting off their exports?”

“From this point out I think we’ll see a geometric progression in prices… you know, $50, $100, $200, $400, whatever. The only question now is how short the periods will be between prices doubling again.”

“The reality is that this thing is coming so much faster and so much harder than even most pessimists were expecting.”

For a useful way to think about energy exports and prices, Jeff Brown points to the current situation with global rice supplies.

As long as there are abundant local supplies, countries are happy, eager in fact, to export excess production in order to generate foreign exchange. But as soon as local consumption exceeds locally available production, then all hell breaks loose and the next thing you know countries are banning exports, a move that has already been undertaken by Vietnam and a number of other countries.

In that scenario, price eventually no longer becomes a factor in the availability of the commodity. Vietnam, for example, is not going to let its people starve just because higher global prices would allow it to earn an extra $10 a bag of rice.

And so in the face of the prospect of any serious shortage of an important resource – energy being maybe the most important – export markets freeze up and the price begins to be set at the margin, literally based on a global competition for the dwindling supplies that manage to leak out around the edges.

“People are crazy not to be focusing on the oil export situation,” Dr. Brown told me.

Full Article

Diesel prices in Malaysia have gone up by 63% recently. Naturally, this will squeeze the truckers' profit margins who transport vegetables, eggs and chickens to Singapore. Elsewhere in Asia and Europe, truckers have gone on a strike.

Trucks transport most of the world's food. If truckers go on strike, where will the supermarkets you shop from import their food?

The recent news reports of truckers protesting high diesel prices are a warning to us that we need to re-organise how we obtain our food sources. Depending on farmers who are hundreds and thousands of miles away for our food supplies is a sign of poor resilience. We need to grow more food here at home and intensify organic urban agriculture development. This step is imperative for Singapore to prepare for peak oil. Bear in mind that we import about 90% of the food we consume. As improbable as it may seem, do not discount the possibility of empty supermarket shelves in our "Food Paradise" if oil prices continue to rise. I don't wish to imagine the outcome in the event of food scarcity here in Singapore, which has one of the highest population densities in the world.

The Straits Times - Up prices of eggs and some vegetables

Meanwhile, Malaysian transportation companies have informed importers that they will charge up to 30 per cent more to haul leafy vegetables into Singapore. Last Thursday, Malaysia cut back its fuel subsidies, which increased pump prices for petrol by 41 per cent and diesel by 63 per cent.

The increase has trickled down to wet markets here, which have already been forced to raise prices because of a supply crunch.

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Fuel Protests Erupt in Asia As Oil Hits $139 a Barrel

Protests over soaring fuel prices erupted in Asia on Tuesday as truckers in Hong Kong and tire-burning demonstrators in India and Nepal added their angry voices to protests that began last month in Europe.

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Truckers' strike clogs highways, causes supply disruptions in Spain

Vendors warned of shortages of fruit, vegetables and meat this week at Madrid's sprawling wholesale market, Mercamadrid, if the strike continues.

TheOilDrum

We are now in the early stages of a full blown energy crisis that was predictable if not wholly avoidable. Politicians are awaking to the crisis now that escalating energy costs make its existence plain to see. It is highly unlikely that politicians will now grasp the gravity of the situation that the OECD and rest of the world faces and the responses will likely be ineffectual and too little too late.

The principal reason for current high oil price is the proximity of a peak in global oil production. Politicians must understand this and then grasp that natural gas and coal supplies will follow oil down by mid century. Reducing taxes on energy consumption right now is the wrong thing to do. Taxation structure needs to be adjusted to oblige energy producing companies to re-invest wind fall profits in alternative energy sources on a truly massive scale.

Energy efficiency should be the guiding beacon of all policy decisions and this must apply equally to energy production and energy consumption.

Full Article

Giving subsidies will not cure high prices for food and oil, and neither will a "dynamic economy" as MM Lee indicated. Will more money alone solve our problems? Will more paper dollars guarantee that we can continue to buy food at market prices as MM Lee suggested? Will Vietnam and Thailand sell any rice to us if they have a poor harvest? Can money buy you food that is not available? Can money buy what is not for sale? Instead of a "dynamic economy", we ought to be thinking of how to increase local food production so that we can be more self-sufficient.

MM Lee Kuan Yew is holding on to a fundamental error held by conventional economists:

Error: Economic activity as a function of infinite "money creation", rather than a function of finite "energy stocks" and finite "energy flows". In fact, the economy is 100% dependent on available energy -- it always has been, and it always will be.

Economic students are taught that banks "create" money every time they make a loan, and that the economy is powered by money instead of energy. The juxtaposition of these two data (the first is true, the second is false) leads even Nobel Prize-winning economists to conclude they have discovered a perpetual-motion machine:

"Should we be taking steps to limit the use of these most precious stocks of society's capital so that they will still be available for our grandchildren? . Economists ask, Would future generations benefit more from larger stocks of natural capital such as oil, gas, and coal or from more produced capital such as additional scientists, better laboratories, and libraries linked together by information superhighways? ... in the long run, oil and gas are not essential." [ p. 328, ECONOMICS, Nobel Laureate Paul Samuelson and William Nordhaus; McGraw-Hill, 1998; http://www.amazon.com/exec/obidos/ASIN/0070579474/brainfood.a ]

No person has had a greater influence on the thinking of experts who have become government regulators of the world's oil and gas industries than economist Morris Adelman: "There are plenty of fossil fuels and no limit to potential electrical capacity. It is all a matter of money." [ p. 483, THE ECONOMICS OF PETROLEUM SUPPLY, by M. A. Adelman; MIT, 1993; http://www.amazon.com/exec/obidos/ASIN/0262011387/brainfood.a ]

But of course, economists like Samuelson, Nordhaus, and Adelman are wrong. The First and Second Laws of thermodynamics tells us there is a limit to potential electrical capacity -- it's not all a matter of "money", it's all a matter of "energy".

The money supply is not constrained by the laws of matter-energy (ecosystem/biosphere) within which our economy must operate. When the physical constraints of our production are reached, the disparity between our monetary and physical system will manifest itself as price inflation, which is what we are witnessing today.

It is lamentable that our leaders do not recognize the errors of the conventional economic system, which explains why I will continue to be pessimistic about our future until there is a fundamental shift in their worldview. They are still trapped in their old mindsets and change will not come easily as they were taught and trained to think "economically" instead of "thermodynamically". Modern economics is not based on scientific laws.

MM Lee: Because with a good currency, 'however much the price of rice goes up, or meat, or whatever, we will not go hungry'.

Modern industrial agriculture is highly dependent on high energy inputs. When oil production begins its irreversible decline, large-scale agricultural outputs will follow suit. In view of the recent news that several countries have curb their grain exports, do you think food exporting nations will sell any food to us if they are unable to satisfy their citizens' stomachs?

The keywords to our future survival are "self-sufficiency" and "redundancy". It may not be economical to produce our own food and to ramp up solar energy production now, but these steps will increase our resilience in times of food and oil disruptions which look increasingly likely each passing day. Unfortunately, redundancy is often at odds with economic efficiency - a "sacred cow" in the Singapore context. When it comes to food and energy production, being "economical" and "efficient" increase our vulnerability to external shocks.

MM Lee's typical "money-will-solve-all problems" thinking is best summed up by Richard Heinberg who was writing hypothetically from the future:

The economists had been operating on the basis of their own religion - an absolute, unshakable faith in the Market-as-God and in supply-and-demand. They figured that if oil started to run out, the price would rise, offering incentives for research into alternatives. But the economists never bothered to think this through. If they had, they would have realized that the revamping of society's entire energy infrastructure would take decades, while the price signal from resource shortages would come at the exact moment some hypothetical replacement would be needed. Moreover, they should have realized that there was no substitute capable of fully replacing the energy resources they had come to rely on.

The economists could think only in terms of money; basic necessities like water and energy only showed up in their calculations in terms of dollar cost, which made them functionally interchangeable with everything else that could be priced -- oranges, airliners, diamonds, baseball cards, whatever. But, in the last analysis, basic resources weren't interchangeable with other economic goods at all: you couldn't drink baseball cards, no matter how big or valuable your collection, once the water ran out. Nor could you eat dollars, if nobody had food to sell. And so, after a certain point, people started to lose faith in their money. And as they did, they realized that faith had been the only thing that made money worth anything in the first place. Currencies just collapsed, first in one country, then in another. There was inflation, deflation, barter, and thievery of every imaginable kind as matters sorted themselves out.

In the era when I was born, commentators used to liken the global economy to a casino. A few folks were making trillions of dollars, euros, and yen trading in currencies, companies, and commodity futures. None of these people were actually doing anything useful; they were just laying down their bets and, in many cases, raking in colossal winnings. If you followed the economic chain, you'd see that all of that money was coming out of ordinary people's pockets...but that's another story. Anyway: all of that economic activity depended on energy, on global transportation and communication, and on faith in the currencies. Early in the 21st century, the global casino went bust. Gradually, a new metaphor became operational. We went from global casino to village flea market.

With less energy available each year, and with unstable currencies plaguing transactions, manufacturing and transportation shrank in scale. It didn't matter how little Nike paid its workers in Indonesia: once shipping became prohibitively expensive, profits from the globalization of its operations vanished. But Nike couldn't just start up factories back in the States again; all of those factories had been closed decades earlier. The same with all the other clothing manufacturers, electronics manufacturers, and so on. All of that local manufacturing infrastructure had been destroyed to make way for globalization, for cheaper goods, for bigger corporate profits. And now, to recreate that infrastructure would require a huge financial and energy investment ---- just when money and energy were in ever shorter supply. (Peak Everything, pp. 175-177)

http://www.straitstimes.com/Free/Story/STIStory_241154.html

OIL and food prices are at record highs and look set to stay that way.

At the same time, there are Singaporeans who want subsidies for a range of items, from rice to bus fares.

But Minister Mentor Lee Kuan Yew made clear yesterday that subsidies are no way to solve problems caused by rising costs.

He argued that subsidies reduced the incentive for people to be competitive - which is what is needed to keep the economy growing in order to better pay for costlier essential items:

'As long as we have a dynamic economy, we can solve our problems. Subsidies cannot solve them.

'I read the newspapers and the simplest thing is to write and say, subsidise. Rice, oil, bus fares, even putting seat belts on school buses. That is the surest way to go downhill.

'Multiple subsidies have led to a welfare system that has trapped Europe in slow growth. Europe's welfare systems have lowered incentives for people to strive and to excel.'

Speaking to 6,000 constituents at the Tanjong Pagar GRC Family Day at the Queenstown Stadium, he dwelt on why the problem of rising costs is here to stay and how Singapore plans to deal with it.

He noted that the consumption of oil had risen, with few new oil discoveries. And as once-poor countries like China and India prospered, they needed fuel to make goods to export.

The world's population, now over six billion, is forecast to hit nine billion by 2050. But climate change is drying up agricultural areas.

'What are we going to do? We can see the signals,' he said.

'We can't grow tapioca, or corn; we can't compete in making Nike shoes or sewing gowns. We have to move up to more complicated jobs and services.

'We have to earn enough money by working hard and smart in manufacturing and services to pay market prices for food, rice, wheat, maize, vegetables, fruits, fish, meats, chicken and eggs.'

Because with a good currency, 'however much the price of rice goes up, or meat, or whatever, we will not go hungry'.

Singapore had to remain a competitive society to generate growth.

'The Government must ensure that everyone has the highest-paid job he is qualified to do. If his salary is below the minimum for a decent life, the Government will top up with Workfare,' he said, referring to the national income supplement for low-wage workers.

And if people know the cost of what they consume or use, they will spend their money 'more to (their) benefit', he said, instead of over-using or abusing subsidised items which they did not know the real cost of.

Mr Lee said neighbouring countries now had to grapple with the economically-necessary task of cutting fuel subsidies. In Indonesia, for example, there were riots.

But he noted that opposition leaders there also encouraged demonstrations over the cuts and rising food prices to weaken the chances of President Susilo Bambang Yudhoyono winning re-election next year.

'In Malaysia, determined efforts by former PM Mahathir to unseat PM Abdullah Badawi have not weakened his (Abdullah's) hold on the reins of power because he commands a decisive majority in Parliament, just short of two-thirds,' he added.

'But not to upset the electorate, his government has not reduced the subsidy on oil.

'Of our other neighbours, Thailand faces the danger of another coup. In the Philippines, charges of corruption hover over President Gloria Arroyo, damaging for investors and the economy.'

Citing recent natural disasters in Myanmar, he said Singapore had 'no earthquakes, no tsunamis, no typhoons because of our favourable geographic location'.

'Let us be grateful that we have long-term stability and therefore continuing high-value investments and good growth,' he said.

'In five years, we will have a more lively and beautiful city.'

He was also confident that other big cities in Asean - Bangkok, Kuala Lumpur, Jakarta, Manila, Ho Chi Minh and Hanoi - would flourish with the advent of the Asean free trade area and other free trade pacts.

MM Lee then apologised to the audience for not being able to speak too long last night, as he had a 'bad throat' and is scheduled to take the stand in court today.

The hearing is to assess damages that Singapore Democratic Party chief Chee Soon Juan, his sister and the party have to pay for defaming Mr Lee and Prime Minister Lee Hsien Loong in 2006.

'I've got to save part of my voice to let him cross-examine me,' Mr Lee said. 'Of course, in the course of the cross-examination, I have a few things to say.'

http://www.channelnewsasia.com/stories/singaporelocalnews/view/349929/1/.html
http://www.todayonline.com/articles/255800.asp

Last year, I emailed several ministers and my MPs for answers to my peak oil queries. None of them responded except the Minister of Defence, Teo Chee Hean - hats off to him.

Read Mindef's response below and gauge for yourself - Is Singapore prepared for peak oil? Judging from this letter alone, these plans are best described as "symptomatic treatments".

In medicine, a symptomatic treatment is therapy that eases the symptoms of a disease without addressing its etiology or root cause. Likewise, the Singapore government's plans to tackle energy-related threats to our economic growth and national security are just like symptomatic treatments which will only provide temporary relief. Just as you cannot cure a cancer patient with painkillers alone, so are we unable to solve our energy/ecological problems by merely turning to alternative energies.

Herman Daly: Environmental degradation is an iatrogenic disease induced by the economic physicians who attempt to treat the basic sickness of unlimited wants by prescribing unlimited production. We do not cure a treatment-induced disease by increasing the treatment dosage! Yet members of the hair-of-the-dog-that-bit-you school, who reason that it is impossible to have too much of a good thing, can hardly cope with such subtleties. If an overdose of medicine is making us sick, we need an emetic, not more of the medicine. Physician, heal thyself.

Here are some of the issues and questions that I have with regard to Mindef's letter:

1. Population levels and growth were not addressed: we can conserve and improve our energy efficiency per-capita, but if population levels are not kept in check, overall energy consumption will still increase.

2. Food supplies were not addressed: peak oil entails peak food production in industrial agriculture. Diversifying our food sources is not a satisfactory solution since they are probably highly dependent on fossil fuels for their efficiency and output. Should we not consider devising a plan to carry out intensive urban agriculture as the Cubans have done? How did the Cubans manage it? Here's an excerpt from Richard Heinberg's latest book, Peak Everything (pp. 56-57):

In the early 1990s, with the collapse of the Soviet Union, Cuba lost its source of cheap oil. Its industrialized agricultural system, which was heavily fuel-dependent, immediately faltered. Very quickly, Cuban leaders abandoned the Soviet industrial model of production, changing from a fuel- and petrochemical- intensive farming method to a more localized, labor-intensive. organic mode of production.

How they did this is itself an interesting story. Eco-agronomists at Cuban universities had already been advocating a transition somewhat along these lines. However, they were making little or no headway. When the crisis hit, they were given free rein to, in effect, redesign the entire Cuban food system. Had these academics not had a plan waiting in the wings, the nation's fate might have been sealed.

...Cuban farmers began breeding oxen for animal traction. The Cuban people adopted a largely vegetarian diet...Urban gardens (including rooftop gardens) were encourage, and today they produce 50 to 80 percent of vegetables consumed in cities.

Early on, it was realized that more farmers were needed, and that this would require education. All of the nation's colleges and universities quickly added courses on agronomy. At the same time, wages for farmers were raised to be at parity with those for engineers and doctors...

The result was survival. The average Cuban lost 20 pounds of body weight, but in the long run the overall health of the nation's people actually improved. Today, Cuba has a stable, slowly growing economy. There are few if any luxuries, but everyone has enough to eat. Having seen the benefit of smaller-scale organic production, Cuba's leaders have decided that even if they find another source of cheap oil, they will maintain a commitment to their new, decentralized, low-energy methods.

3. Our flawed limitless economic growth model: economic growth is the increase in the production and consumption of goods and services over a certain period. How can we reconcile limitless economic growth with finite natural resources? And without economic growth, there would be large scale financial instability because of our fractional reserve banking system.

4. Peak natural gas: crude oil peaks and so does natural gas. Research from theoildrum and hubbertpeak say that conventional natural gas would peak by 2020 - a mere 8 years after Singapore completes its LNG facilities in 2012; CNG and LNG are not a panacea to our energy woes. Is the government not aware of peak natural gas?

5. Biofuels and solar: They cannot equal crude oil in terms of versatility, usefulness and energy density. There are about 860,000 vehicles here in Singapore and 600 million worldwide. Can we expect to convert even a quarter of these vehicles to alternative fuels by 2030? (the year Energy Watch Group expects global oil production to drop by half to 39M/D).

The development of alternative energies is contingent on a fossil fuel economy and infrastructure. It's a vicious cycle: we need alternative energies to wean ourselves from fossil fuels, but we can't accomplish it unless we have fossil fuels around to develop such technologies.

12 April 2007

From: MINDEF SINGAPORE

To: Dear TM

PEAK OIL AND IMPLICATIONS FOR MINDEF

1 . I refer to your feedback addressed to the Minister for Defence.

2. Energy security is a global concern, and more so for countries like Singapore which do not have domestic oil sources. We would like to assure you and other members of the public that the government is keeping a close watch on energy developments such as peak oil projections and is committed to develop robust solutions for the present and future energy needs of Singapore.

3. The Government has put in place policies to safeguard security of our energy supplies and at the same time ensure competitiveness of our electricity costs. Due to the relatively higher efficiency of combined cycle gas turbines, more than 80% of our electricity today is generated using natural gas. To ensure continuity of our electricity supplies, generation companies are required to put in place measures to deal with system contingencies, such as the requirement for these companies to hold 90 days worth of fuel reserves. If natural gas supply is disrupted, our gas turbines can switch to diesel that is stockpiled. MINDEF also ensures adequate fuel stockpiles for national defence needs.

4. The system would be further strengthened with the introduction of Liquefied Natural Gas (LNG) import over time. LNG will also ensure that Singapore has security of supply through source diversification and enable the creation and introduction of competition in gas in the longer term.

5. Concurrently, Singapore is also exploring clean energy. EDB has achieved early success in promoting this sector including attracting solar photo voltaic and bio­fuel players to set up in Singapore. From the perspective of meeting Singapore's energy needs today, renewable energy sources presently have cost and technology limitations. Nonetheless, the Government is keeping a close watch and has committed S$170 million in research funds to develop a clean energy industry, with solar energy as a key area of research.

6. Besides developing new energy sources, it is also important that good energy conservation practices are adopted to reduce our consumption of conventional energy. The National Environment Agency has launched an Energy Efficiency Improvement Assistance Scheme (EASE), which companies can tap on to engage expert consultants to audit their energy consumption and recommend measures to save energy. For households, consumers can also turn to devices such as efficient electrical appliances, in order to use energy efficiently. NEA administers an energy labelling programme to help consumers select efficient air conditioners and refrigerators.

7. We thank you for your feedback.

Yours sincerely

MS LU KAH MIN
for PERMANENT SECRETARY
MINISTRY OF DEFENCE

When will our local papers (The Straits Times, TNP, Today, MyPaper, Business Times) touch on this subject in detail?

In Malaysia, oil has been a major source of exports, government revenue and economic growth for decades. But its heyday is past. Last week Deputy Prime Minister Datuk Seri Najib Tun Razak revealed: “If we don’t find new reserves by 2011, our oil imports will exceed exports.”

Indonesia some years ago already reached its “peak oil” point, and today is a net oil importer. It will be Malaysia’s turn in just a few years....

Read More......

_______________________________________________________________

Brunei's Minister of Energy at the Prime Minister's Office yesterday called oil the lifeblood of Brunei Darussalam and hence it matters very much how well the country manages these valuable resources..."It is not easy to bring out oil from the ground. The days of cheap and easy oil are not here anymore," said Pehin Dato Hj Yahya.

"Many reservoirs are no longer using the primary drive to move the oil to the surface. Many arc now using secondary or tertiary recovery methods to extract the extra molecule of hydrocarbon (oil and gas) from the formation.

"The secondary and tertiary recovery methods are obviously expensive, risky and have a much longer gestation period. Many oil companies have also gone into high-pressure and high-temperature areas again at a cost and risk very much steeper than before," he said...

Read More.....

The geoscientist who proposed the peak oil theory in 1956, Marion King Hubbert, and correctly predicted oil production to peak in the U.S. in 1970, was also sharp enough to grasp the significance of his theory on economics, money, and industrialization. It is puzzling why our economic policymakers do not see the big picture: that the last 100 years of exponential growth in population and industrial output is, what Hubbert would call, an "aberration". Hubbert was trained as a geologist, yet he probably had a better idea of what sustainable monetary policies and economics ought to be. He was a great visionary.

Our politicians formulate their policies around the growth model which must fail at some point due to limiting factors such as land, energy or water. In medicine, uncontrolled growth of abnormal tissue cells in the body and the invasion by these cells into nearby tissue is known as cancer; on the contrary, in conventional economics, growth without boundaries which upsets our ecological balance is known as a panacea for all our social and economic ills. How ironic.

Hubbert quotes:

http://www.mkinghubbert.com/tribute/quotes

Hubbert on the burgeoning world population: "[Its] an aberration. For most of human history, the population doubled once every 32,000 years. Now it's down to 35 years. That is dangerous. No biologic population can double more than a few times without getting seriously out of bounds. I think the world is seriously overpopulated right now. There can be no solutions to the world's problems that do not include the stabilization of the world's population."

---

http://www.oilcrisis.com/hubbert/monetary.htm

Hubbert on our monetary system: "The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.

"Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely, exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest. This disparity between a monetary system which continues to grow exponentially and a physical system which is unable to do so leads to an increase with time in the ratio of money to the output of the physical system. This manifests itself as price inflation. A monetary alternative corresponding to a zero physical growth rate would be a zero interest rate. The result in either case would be large-scale financial instability.

"With such relationships in mind, a review will be made of the evolution of the world's matter-energy system culminating in the present industrial society. Questions will then be considered regarding the future:

• What are the constraints and possibilities imposed by the matter-energy system? human society sustained at near optimum conditions?

• Will it be possible to so reform the monetary system that it can serve as a control system to achieve these results?

• If not, can an accounting and control system of a non-monetary nature be devised that would be appropriate for the management of an advanced industrial system?

"It appears that the stage is now set for a critical examination of this problem, and that out of such inquries, if a catastrophic solution can be avoided, there can hardly fail to emerge what the historian of science, Thomas S. Kuhn, has called a major scientific and intellectual revolution."

---

http://www.mkinghubbert.com/tribute/quotes

Hubbert on our culture: "The steep ride up the and down the energy curve is the most abnormal thing that has ever happened in human history. Most of human history is a no-growth situation. Our culture is built on growth and that phase of human history is almost over and we are not prepared for it. Our biggest problem is not the end of our resources. That will be gradual. Our biggest problem is a cultural problem. We don't know how to cope with it."

Even in the face of denial of epic proportions, Hubbert remained optimistic: "Since the problems confronting us are not intrinsically insoluble, it behooves us, while there still is yet time, to begin a serious examination of the nature of our cultural constraints and of the cultural adjustments necessary to permit us to deal with effectively with the problems rapidly arising. Provided thus can be done before unmanageable crises arise, there is promise that we could be on the threshold of achieving one of the greatest intellectual cultural advances in human history." [This quote is more than 20 years old, do we still have time?]

---

http://www.hubbertpeak.com/hubbert/monetary.htm

"'I was in New York in the 30s. I had a box seat at the depression,' Hubbert says. 'I can assure you it was a very educational experience. We shut the country down because of monetary reasons. We had manpower and abundant raw materials. Yet we shut the country down. We're doing the same kind of thing now but with a different material outlook. We are not in the position we were in 1929-30 with regard to the future. Then the physical system was ready to roll. This time it's not. We are in a crisis in the evolution of human society. It's unique to both human and geologic history. It has never happened before and it can't possibly happen again. You can only use oil once. You can only use metals once. Soon all the oil is going to be burned and all the metals mined and scattered.'

"That is obviously a scenario of catastrophe, a possibility Hubbert concedes. But it is not one he forecasts. The man known to many as a pessimist is, in this case, quite hopeful. In fact, he could be the ultimate utopian. We have, he says, the necessary technology. All we have to do is completely overhaul our culture and find an alternative to money.

"'We are not starting from zero,' he emphasizes. 'We have an enormous amount of existing technical knowledge. It's just a matter of putting it all together. We still have great flexibility but our maneuverability will diminish with time.'

"A non-catastrophic solution is impossible, Hubbert feels, unless society is made stable. This means abandoning two axioms of our culture...the work ethic and the idea that growth is the normal state of life...."

"Our window of opportunity is slowly closing...at the same time, it probably requires a spiral of adversity. In other words, things have to get worse before they can get better. The most important thing is to get a clear picture of the situation we're in, and the outlook for the future--exhaustion of oil and gas, that kind of thing...and an appraisal of where we are and what the time scale is. And the time scale is not centuries, it's decades."

In a recent Bloomberg interview, MM Lee said that the Government of Singapore Investment Corporation Pte Ltd, or GIC, may hold their stakes in western financial institutions for 20-30 years. Some of the institutions that GIC has invested in recently are Citigroup and UBS.

Once again, I believe this highlights our Minister Mentor's poor sense, or lack of understanding, of the direction in which the world is heading. We are no longer living in the 1950's or 60's when oil discoveries flourish and world energy production per capita grew rapidly. We are now entering the twilight of oil extraction and energy production.

When oil supplies cannot keep up with demand, economic growth will stagnate and decline. It should be obvious that financial institutions will suffer since their earnings are predicated on robust economic activity; I expect Citigroup, UBS and many major financial institutions to sink in the not too distant future.

Our Industrial Civilization runs on oil, period. Anyone who thinks we can easily transition to an economy that runs on alternative energy without major disruptions to our lives is delusional. Geologist Walter Youngquist explains clearly the myths and realities of alternative solutions.

Oil is currently selling for about $115 a barrel. Oil production appears to have peaked at about 85 million barrels a day. See chart below. Taken from http://gailtheactuary.wordpress.com/files/2007/06/world-oil.jpeg





Oil prices have climbed more than 400% since 2000. During this period, oil production was able to meet growing demand from China and India. I cannot imagine what prices will be like when production begins to decline. See chart below. Taken from http://upload.wikimedia.org/wikipedia/en/2/2f/Oil_Prices_Medium_Term.png





The German-based Energy Watch Group predicts that world oil production will fall by 30% as soon as 2020, a mere 12 years away.

Using the Export Land Model developed by Jeffrey Brown, oil exporting countries will go from peak exports to zero exports in nine years. In other words, if all oil exporting nations were to hit peak production today, they will export zero barrels of oil in nine years because of domestic oil consumption.

GIC, which manages Singapore's foreign reserves, is going to regret they ever made this investment.

Because our Minister Mentor, whom I believe still wields great influence on our ministers and MPs, shows no hint of understanding our current ecological crises (peak oil, overshoot, overpopulation, high entropy), I fear Singapore will be in for very hard times.

Marketwatch report on the Bloomberg interview