Singapore Peak Oil

The Gospel Of Consumption

Rather than realizing the enriched social life that Kellogg’s vision offered us, we have impoverished our human communities with a form of materialism that leaves us in relative isolation from family, friends, and neighbors. We simply don’t have time for them. Unlike our great-grandparents who passed the time, we spend it. An outside observer might conclude that we are in the grip of some strange curse, like a modern-day King Midas whose touch turns everything into a product built around a microchip...

We can break that cycle by turning off our machines when they have created enough of what we need. Doing so will give us an opportunity to re-create the kind of healthy communities that were beginning to emerge with Kellogg’s six-hour day, communities in which human welfare is the overriding concern rather than subservience to machines and those who own them. We can create a society where people have time to play together as well as work together, time to act politically in their common interests, and time even to argue over what those common interests might be. That fertile mix of human relationships is necessary for healthy human societies, which in turn are necessary for sustaining a healthy planet.

If we want to save the Earth, we must also save ourselves from ourselves. We can start by sharing the work and the wealth. We may just find that there is plenty of both to go around.

Why The Demise Of Civilization May Be Inevitable

Original Link

There is, however, a price to be paid. Every extra layer of organisation imposes a cost in terms of energy, the common currency of all human efforts, from building canals to educating scribes. And increasing complexity, Tainter realised, produces diminishing returns. The extra food produced by each extra hour of labour -- or joule of energy invested per farmed hectare -- diminishes as that investment mounts. We see the same thing today in a declining number of patents per dollar invested in research as that research investment mounts. This law of diminishing returns appears everywhere, Tainter says...

Eventually, says Tainter, the point is reached when all the energy and resources available to a society are required just to maintain its existing level of complexity. Then when the climate changes or barbarians invade, overstretched institutions break down and civil order collapses. What emerges is a less complex society, which is organised on a smaller scale or has been taken over by another group.

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

First, they demand proof of identification if you want to buy subsidised fuel meant for the Malaysians.

Malaysia on Sunday said it was considering using its chip-based national identity card to prevent visitors from Singapore and Thailand buying cheap subsidised fuel meant for locals.

Its latest plan comes as the government begins radically reviewing its fuel subsidies, expected to cost 43 billion ringgit (13.6 billion dollars) this year if oil prices hover around 120 dollars per barrel.

Malaysia heavily subsidises petrol, diesel and gas as well as 21 food items but rising global prices and controls have triggered severe shortages, as well as smuggling across its porous borders and long coastline.

"The technical features are there on the Mykad (Malaysian identification card) and can be integrated with fuel pumps so they can be used to identify the person," domestic trade and consumer affairs minister Shahrir Samad told AFP.

"We are looking to see if we can use it on the fuel pumps so that only Malaysian citizens get the subsidy," he added.

"We should not be subsidising fuel and goods for foreigners like Singaporeans and Thais. Those without MyKads can continue to buy the fuel at the pumps but at unsubsidised prices."

Read more.....

Second, they have turned to bartering to secure their rice supplies. Will they barter trade with Singapore? What does Singapore have to offer?

With Malaysia struggling to shelter its people from the steep rise in the cost of rice and desperate to expand its painfully diminished “buffer” stockpile, its Minister for Plantation Industries and Commodities said that his country would swap palm oil for rice with any rice-producing nation willing to make the trade.

Read more.......

What next? Will they halt all vegetable and meat exports to Singapore if they can't satisfy domestic demand? What will Singapore do then?

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......

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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.....

In 2007, Minister for National Development, Mah Bow Tan, explained why Singapore needs 6.5 million people:

To grow and create more and better jobs, Singapore must remain open, competitive and relevant to the global market place. In such an economy, we need sufficient people with the right skills and experience. If we cannot get enough from our own people, we must supplement with skilled immigrants. A larger population and greater economic activity will bring about greater buzz, vibrancy and energy, which in turn will attract more people 
and new opportunities.

Obviously, we are still trapped in the growth mindset.

I think he should watch this lecture by professor Bartlett. Anyone who watches this video and continues to believe that population and economic growth can be sustained indefinitely is beyond me. Viewing of this video should be mandatory for all high-level policymakers.

Summary of the video: The greatest shortcoming of the human race is our inability to understand the exponential function.


Part 1


Part 2
Part 3
Part 4
Part 5
Part 6
Part 7
Part 8

Our world now faces challenging ecological and environmental problems (peak oil, climate change, energy security, food inflation, loss of biodiversity, wildlife extinctions, overpopulation). From what I have been reading, our government's solutions to these problems are more growth: 1) allow the population to increase to keep us economically competitive; 2) keep the economy growing and strong so that we become richer, and with our riches we can solve these problems.

Excerpts from a speech by PM Lee Hsien Loong at NTUC May Day Rally, 1 May 2008:

http://app.sprinter.gov.sg/data/pr/20080501991.htm

So, this is the way to grow our economy, create more jobs and more opportunities and improve the lives of all our workers and when I say all our workers, that means all of them. Not just the highly qualified and educated ones, but all collars, from cleaners and security guards, to technical and professional staff. Not just young workers but all ages, from new job entrants to mid-career and mature workers and not just local workers but all nationalities, from Singaporeans to others who are here, to work here and to help us reach our goals for Singapore.

There are challenges ahead -- the US economy, higher food prices, cost of living, low wage workers and so on -- and there will be more challenges to come. But our approach is working, so we have to persevere and press on, because we are heading in the right direction. Build our tripartite partnerships, educate and train our people, help our industries to innovate, upgrade, build social safety nets to assist needy Singaporeans. Then, however choppy the waters, we can maintain a steady course, sail ahead and secure a brighter future and a better life for all of you and us. Thank you.

I think this is a big mistake. Our leaders don't understand our limits to growth. They do not understand that the neoclassical economic growth model assumptions that we have embraced cannot be sustained with peak oil and a burgeoning world population. If we continue with this growth model, the system will collapse under its own weight.

There is one word that describes our government policies: insane. Insanity is doing the same thing over and over again and expecting different results. Why do I say their policies are insane? Because the cause of our current problems is overgrowth: overpopulation, over-consumption of resources, over-exploitation of planet earth. Will more economic growth solve our problems? If overgrowth is indeed the root cause, then why does the Singapore government continue to insist that "more growth" is the answer to our problems?

Our government needs to consider alternative solutions, and Singaporeans have the right to be aware of such alternatives. The alternative to consider is a Steady State Economy (SSE). I urge our policymakers to consider the SSE as an alternative to a growth economy.

What is a Steady-state economy? It is an economy viewed as a subsystem in dynamic equilibrium with the parent ecosystem/biosphere that sustains it. Quantitative growth is replaced with qualitative development or improvement as the basic goal. (Ecological Economics: Principles and Applications).

This synopsis by Herman Daly is a good explanation of why we need a SSE and how we can go about implementing it. You can read it in full here: http://www.theoildrum.com/node/3941

A failed growth economy and a steady-state economy are not the same thing; they are the very different alternatives we face. The Earth as a whole is approximately a steady state. Neither the surface nor the mass of the earth is growing or shrinking; the inflow of radiant energy to the Earth is equal to the outflow; and material imports from space are roughly equal to exports (both negligible). None of this means that the earth is static—a great deal of qualitative change can happen inside a steady state, and certainly has happened on Earth. The most important change in recent times has been the enormous growth of one subsystem of the Earth, namely the economy, relative to the total system, the ecosphere. This huge shift from an “empty” to a “full” world is truly “something new under the sun” as historian J. R. McNeil calls it in his book of that title. The closer the economy approaches the scale of the whole Earth the more it will have to conform to the physical behavior mode of the Earth. That behavior mode is a steady state—a system that permits qualitative development but not aggregate quantitative growth. Growth is more of the same stuff; development is the same amount of better stuff (or at least different stuff). The remaining natural world no longer is able to provide the sources and sinks for the metabolic throughput necessary to sustain the existing oversized economy—much less a growing one.

Economists have focused too much on the economy’s circulatory system and have neglected to study its digestive tract. Throughput growth means pushing more of the same food through an ever larger digestive tract; development means eating better food and digesting it more thoroughly. Clearly the economy must conform to the rules of a steady state—seek qualitative development, but stop aggregate quantitative growth. GDP increase conflates these two very different things.

We have lived for 200 years in a growth economy. That makes it hard to imagine what a steady-state economy (SSE) would be like, even though for most of our history mankind has lived in an economy in which annual growth was negligible. Some think a SSE would mean freezing in the dark under communist tyranny. Some say that huge improvements in technology (energy efficiency, recycling) are so easy that it will make the adjustment both profitable and fun.

Regardless of whether it will be hard or easy we have to attempt a SSE because we cannot continue growing, and in fact so-called “economic” growth already has become uneconomic. The growth economy is failing. In other words, the quantitative expansion of the economic subsystem increases environmental and social costs faster than production benefits, making us poorer not richer, at least in high consumption countries. Given the laws of diminishing marginal utility and increasing marginal costs this should not have been unexpected. And even new technology sometimes makes it worse. For example, tetraethyl lead provided the benefit of reducing engine knock, but at the cost spreading a toxic heavy metal into the biosphere; chlorofluorocarbons gave us the benefit of a nontoxic propellant and refrigerant, but at the cost of creating a hole in the ozone layer and a resulting increase in ultraviolet radiation. It is hard to know for sure that growth now increases costs faster than benefits since we do not bother to separate costs from benefits in our national accounts. Instead we lump them together as “activity” in the calculation of GDP.

Full article

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."

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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."

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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?]

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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

You have to wonder at the kind of long term thinking that goes on at the ministerial level when the government decided to give the go ahead to develop the two Integrated Resorts.

PM Lee Hsien Loong's decision to go ahead with the IRs in 2005 was based on studies that they would boost Singapore's image as a global city, provide jobs, and fuel economic growth.

Oppositions to the IRs were related to social problems such as compulsive gambling, loan sharks, organised crime, and money laundering - all of which are legitimate and are causes for concern.

The point I want to bring up is no one in Parliament questioned the possibility that tourism may plunge in coming years due to sustained rising oil prices caused by possible long-term supply disruptions. Hence, wherefore the IRs?

Our DPM Prof Jayakumar, a member of the ministerial committee which was responsible for evaluating the IR tenders, acknowledged peak oil in a 2006 speech at the Singapore Energy Conference, so it comes as a surprise that he did not raise any of the oil disruption concerns and how it may affect tourism here.

Land is a valuable resource. According to PM Lee's speech, the size of the Bayfront and Sentosa sites are 12.2 ha and 47 ha respectively. It's an absolute waste to utilize such land to build holiday resorts which in no way contribute to our food and energy security in the face of possible supply disruptions. The land could have been used for Vertical Farms. If the 59.2 ha of IR land were allocated for Vertical Farming instead, it could be possible to feed up to 900,000 people per year, or about 20% of our current population.

It would seem that in the worldview of our ministers and MPs, there are no physical barriers to growth and progress. I believe this underscores a deficiency in systems and resilience thinking among our ministers and MPs. Redundancy and resilience are the keywords here to our future survival and our leaders seem to be oblivious to these terms.

When the frightening reality of peak oil and food shortages sets in, our Integrated Resorts will be labelled Immaterial Resorts.

im·ma·te·ri·al (ĭm'ə-tîr'ē-əl)

adj.

1. Of no importance or relevance; inconsequential or irrelevant.
2. Having no material body or form.

Paul Krugman, an American economist and columnist for the NYT, appears to "get it" when it comes to our "Limits to Growth". Do Singapore leaders "get it"? I have much respect for our leaders, but their neoclassical economic growth model is no longer relevant in times like this. What worked well for Singapore in the last 40 years to earn us a "developed nation" status will not help us to be self-sufficient and self-sustaining when it comes to food and energy. We need a paradigm shift in our worldview, even if it means sacrificing economic growth.

Here is Krugman's op-ed which was published in The Straits Times (23 April'08, p.21)

http://www.nytimes.com/2008/04/21/opinion/21krugman.html?_r=1&ref=todayspaper&oref=slogin

Nine years ago The Economist ran a big story on oil, which was then selling for $10 a barrel. The magazine warned that this might not last. Instead, it suggested, oil might well fall to $5 a barrel.

In any case, The Economist asserted, the world faced “the prospect of cheap, plentiful oil for the foreseeable future.”

Last week, oil hit $117.

It’s not just oil that has defied the complacency of a few years back. Food prices have also soared, as have the prices of basic metals. And the global surge in commodity prices is reviving a question we haven’t heard much since the 1970s: Will limited supplies of natural resources pose an obstacle to future world economic growth?

How you answer this question depends largely on what you believe is driving the rise in resource prices. Broadly speaking, there are three competing views.

The first is that it’s mainly speculation — that investors, looking for high returns at a time of low interest rates, have piled into commodity futures, driving up prices. On this view, someday soon the bubble will burst and high resource prices will go the way of Pets.com.

The second view is that soaring resource prices do, in fact, have a basis in fundamentals — especially rapidly growing demand from newly meat-eating, car-driving Chinese — but that given time we’ll drill more wells, plant more acres, and increased supply will push prices right back down again.

The third view is that the era of cheap resources is over for good — that we’re running out of oil, running out of land to expand food production and generally running out of planet to exploit.

I find myself somewhere between the second and third views.

There are some very smart people — not least, George Soros — who believe that we’re in a commodities bubble (although Mr. Soros says that the bubble is still in its “growth phase”). My problem with this view, however, is this: Where are the inventories?

Normally, speculation drives up commodity prices by promoting hoarding. Yet there’s no sign of resource hoarding in the data: inventories of food and metals are at or near historic lows, while oil inventories are only normal.

The best argument for the second view, that the resource crunch is real but temporary, is the strong resemblance between what we’re seeing now and the resource crisis of the 1970s.

What Americans mostly remember about the 1970s are soaring oil prices and lines at gas stations. But there was also a severe global food crisis, which caused a lot of pain at the supermarket checkout line — I remember 1974 as the year of Hamburger Helper — and, much more important, helped cause devastating famines in poorer countries.

In retrospect, the commodity boom of 1972-75 was probably the result of rapid world economic growth that outpaced supplies, combined with the effects of bad weather and Middle Eastern conflict. Eventually, the bad luck came to an end, new land was placed under cultivation, new sources of oil were found in the Gulf of Mexico and the North Sea, and resources got cheap again.

But this time may be different: concerns about what happens when an ever-growing world economy pushes up against the limits of a finite planet ring truer now than they did in the 1970s.

For one thing, I don’t expect growth in China to slow sharply anytime soon. That’s a big contrast with what happened in the 1970s, when growth in Japan and Europe, the emerging economies of the time, downshifted — and thereby took a lot of pressure off the world’s resources.

Meanwhile, resources are getting harder to find. Big oil discoveries, in particular, have become few and far between, and in the last few years oil production from new sources has been barely enough to offset declining production from established sources.

And the bad weather hitting agricultural production this time is starting to look more fundamental and permanent than El Niño and La Niña, which disrupted crops 35 years ago. Australia, in particular, is now in the 10th year of a drought that looks more and more like a long-term manifestation of climate change.

Suppose that we really are running up against global limits. What does it mean?

Even if it turns out that we’re really at or near peak world oil production, that doesn’t mean that one day we’ll say, “Oh my God! We just ran out of oil!” and watch civilization collapse into “Mad Max” anarchy.

But rich countries will face steady pressure on their economies from rising resource prices, making it harder to raise their standard of living. And some poor countries will find themselves living dangerously close to the edge — or over it.

Don’t look now, but the good times may have just stopped rolling.

Link

THE STRAITS TIMES
March 8, 2008

Oil prices 'unlikely to rise further'

OIL prices are not likely to go higher, Minister Mentor Lee Kuan Yew said yesterday.

As crude oil prices hit US$105 (S$145) per barrel, MM Lee believes it is not likely to creep further up to US$110.

'The oil suppliers are testing the limits. They believe that China and India now form a new long-term base demand. They may be right,' he said.

'I don't think it can go up US$110, US$120, US$150 and the world economy goes on. Inflation will go through the roof.

'Economies of the West will go down, hyper-inflation in many developing countries. So it will go into reverse. There's no projection right to the end.'

He said there is little Singapore can do as it is a price taker and not a price giver.

'We cannot influence Opec, we cannot influence the price of oil or gas.

'All we can do is to adjust our consumption, minimise the amount of power we use to provide the same unit of either goods or services. That's all we can do. What else can we do?' he said.

But, MM Lee said, people should not be rattled by the increase in price. Instead, they should remain alert and adjust to changes.

'We have remained a vibrant economy because we adjust to the market. Whether we panic or don't panic, I think it would be foolish not to be alert to the changes and to take steps to meet them,' he said.

'If the world economy goes into reverse, we are going to be hit. And it's not just us. China, India, the whole region will be hurt. So, this is a worldwide problem.

'Food prices, oil, gas, it's not specific to Asia or South-east Asia. It's worldwide.'


PEH SHING HUEI

Dear MM Lee, I have great respect for what you have done for Singapore, but your comments here highlight your ignorance of peak oil. Oil is the foundation of our industrialization. It is oil that powers our world and our lives. If rice is too expensive, you can turn to other staple foods like wheat, corn or potatoes. Now that oil is getting more pricey, what can we turn to? Unfortunately, there are no substitutes that can equal oil in energy density and industrial versatility. Because there are no good alternatives to oil, demand destruction will not come easily. Oil prices hit $120 recently and I believe it will go much higher before demand destruction sets in.

Related Link.


Geologist Walter Youngquist wrote:

"Oil in its various refined derivative forms, such as gasoline, kerosene, and diesel fuel, has a unique combination of many desirable and useful characteristics. These include a current availability in abundance, a currently high net energy recovery, a high energy density, ease of transportation and storage, relative safety, and great versatility in end use. Oil is also useful as more than an energy source. It is the basis for the manufacture of petrochemical products including plastics, medicines, paints, and myriad other useful materials. Finally, the asphalt "bottoms" from refineries have converted millions of miles of muddy trails around the world into paved highways on which transport vehicles fueled by oil run.

Alternative energy sources must be compared with oil in all these various attributes when their substitution for oil is considered. None appears to completely equal oil"

Our neighbour is planning to increase their food production. What is Singapore doing besides diversifying our food imports? I know that Singapore land is limited, but relying almost 100% on food imports is not a good long term solution to possible supply disruptions caused by peak oil, wars, or climate change. Nations are already hoarding food supplies to feed their own populations by curbing exports. What can we do to increase local food production? Here is a possible solution: Vertical Farming.

http://www.todayonline.com/articles/248664.asp

KUALA LUMPUR — The Malaysian government is planning strategies to boost food production in the hopes of reducing the country's reliance on food imports and controlling inflation, an official said yesterday.

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A Cabinet panel led by Prime Minister Abdullah Ahmad Badawi has been set up to tackle rising consumer prices, said Second Finance Minister Nor Mohamed Yakcop. The authorities believe it is crucial for Malaysia to be more self-sufficient in its food output.

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"This is because we know that in the long run, inflation related to food products will remain for some time," Mr Nor Mohamed was quoted as saying by national news agency Bernama.

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Malaysia's inflation rate accelerated to 2.7 per cent in February compared to 2.3 per cent in January — partly because of rising food prices.

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The minister did not say what food products would be targeted. But officials have said in recent weeks that they are worried about rice in the wake of a global surge in the commodity's prices.

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The government gives financial aid to rice farmers, who produce about 70 per cent of the country's rice needs. Malaysia imports the rest from its neighbours such as Thailand, Vietnam and Cambodia.

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The agriculture ministry has said it needs RM6 billion ($2.57 billion) to cultivate new rice fields and improve infrastructure to boost rice production. — AP

Since Peak Oil is such an important issue with far reaching consequences, you would expect governments around the world to debate the necessary steps to take to mitigate the difficult circumstances that will befall us.

Are we able to use Google to tell which governments have made serious efforts to study the Peak Oil issue?

I used Google to search for the number of occurrences of the term "peak oil" in several government websites where English is the predominant language and here are the results:

United States - 2040
Australia - 1920
New Zealand - 1380
Canada - 1416 (added all "peak oil" occurrences in the provincial websites)
UK - 864
Singapore -2

Of the two times that "peak oil" was mentioned in the Singapore government websites, one was mentioned in a speech by Deputy Prime Minister Professor S Jayakumar in Nov 2006 at an energy conference. The other in the National Library Board as part of a book's title under "New Arrivals".

The Singapore government is aware of peak oil, but why do they seem to be concealing it from the public? Why are there no published government studies made of peak oil's impact on Singapore? Why is there no discussion of this topic in Parliament and our local newspapers?

I posted the following comments on a blog post by a Member of Parliament, Dr. Lam Pin Min, concerning soaring rice prices:

I think the Singapore government is doing the right thing in allowing the SGD to rise, but it is not a good long term solution. Singapore and the rest of the world are not addressing the root causes of the food problem: overpopulation, limits to growth and declining availability of fossil fuels. Just as you cannot cure a cancer patient by treating the symptoms, so you cannot solve the current food crisis by addressing only the symptoms - which in this case is price inflation. A stronger SGD may help in the short term, but it does not address the root causes.

First, we need to understand the "perfect storm" that we are about to face. In a presentation by Paul Chefurka: We are facing a perfect storm of 1) Ecological Collapse, driven by the depletion of natural resources and Climate Change; 2) Energy shortages, driven by Peak Oil and Peak Natural Gas; 3) Economic destabilization driven by American debt loads and a complex and unsustainable global financial system.

I shudder every time I hear our ministers encourage more childbirths and their overemphasis on economic growth. Don't they understand our limits to growth? Have they not read the works and warnings by scientists who have been telling us since the 1970s that humanity's unrestrained growth will result in ecological collapse? Don't they get it?

The Green Revolution of the 1970s was successful due not only to molecular genetics, but also to increased use of pesticides, diesel or gas powered irrigation pumps, and synthetic nitrogen fertilizes - all of which are highly dependent on oil and natural gas. We are unfortunately witnessing a "peak" or decline in the availability of such fossil fuels to which there are no suitable substitutes. How shall modern farmers, who are highly dependent on these resources, grow enough to feed the world in coming years?

Instead of emphasizing economic growth, or should I say Uneconomic growth since such growth only inflates our GDP numbers but not necessarily our well being, our government needs to rethink their priorities and look at how we can become more resilient and sustainable even at the expense of growth. They need to aim for the following:

1) Zero or better still, negative population growth

2) Increase local food production to the point of or near self-sufficiency

3) Increase local energy production to the point of or near self-sufficiency

4) A Steady State Economy


These goals may sound too radical, but I believe it's the only way to ensure our survival and sustainability in the long run. Cuba successfully overcame their oil crisis in the 1990s when they lost 90% of their oil imports after the collapse of the Soviet Union - whom they were so dependent on for oil. It will serve us well to study what they did for this could very well happen to us. In time to come, do not be surprise if such an oil crisis happens to us in a very short period of time because of nationalism and hoarding by oil exporting countries.

Is there anyone in parliament who is perceptive enough to understand these issues? Is there anyone in parliament who is bold enough to bring up these issues and to challenge our flawed assumptions in economics and growth?

I don't wish to sound presumptuous or arrogant, but the following links should be required reading for all our ministers and MPs. I have gone through the links and I am very concerned about our future. These links have altered my fundamental worldview. Frankly, I'm feeling very pessimistic about our survival chances unless we address the above concerns immediately. We don’t have much time left.


Peak Oil Primer

Converging Crisis (PDF)

Youtube lecture on exponential growth and overpopulation

Fossil Fuels and Agriculture

Threats of Peak Oil to the Global Food Supply

The Economist Has No Clothes

Mainstream Economics and the Environmental Crisis

FAQ on Steady State Economy

Peak Oil and Economic Growth

World Scientists' Warning To Humanity (1992)

How Cuba Survived Peak Oil

Cuba's Special Period

Uneconomic Growth

Biophysical Economics

Approaching the world’s environmental problems through the Entropy Law

World Financial Crisis Explained