The disappearance of oil, Peak Oil and the collapse of human industrial society

This was predicted 16 years ago by Mike Ruppert

When news broke out about the war on Iran and the promised closure of the Strait of Hormuz followed by the destruction of oil-producing facilities in the Gulf and the destruction of oil refineries around the world, most importantly in Russia which could have conceivably made up the shortfall of one of Australia’s last remaining refineries at Geelong in Victoria it seemed that this part of the world was headed for disaster.

A country in denial

My partner Pam and I, along with anyone ahead of the curve, have been preparing for disaster - the day when there is simply not enough diesel to transport food to the supermarkets or, indeed, enough fertiliser to plant crops.

This reality is obvious to anyone who pays attention.

It has been, at least in part acknowledged in part by the Australian media while the New Zealand media and government has been missing-in-action.

So, prices are up but the oil tankers are still docking at New Zealand ports, so what could the problem be?

I have learned that tankers, as hard as it might be to believe, have still been carrying pre-war oil and providing this even to countries at the end of the supply chain, like New Zealand and Australia.

Here, we are being told by this government which seems more than happy to take Trump’s side in this war-of-choice of his, that there is no real problem other than some temporary “pain at the pump” and we just need to wait for Trump to clear the Gulf of Hormuz and everything will be hunky-dory and we can return to some “normal” that exists in the prime minister’s head.

Contrast this delusionary “normal” with the obvious panic in South Korea, our largest supplier of refined product.

https://www.news.com.au/finance/economy/world-economy/save-every-drop-south-korea-introduces-relief-payments-as-nation-plunged-into-warlike-situation-amid-oil-crisis/news-story/95c52bc06cadd4d09985e45d6d5e6381

Meanwhile, according to what I’ve been able to divine, South Korea’s refineries are still operating (just), getting crude from wherever they can find it, providing enough, presumably, for their own needs.

Somehow, though, the tankers are still arriving at our ports.

Where is this coming from?

No one will tell us.

Chris Martensen’s analysis

The unreality of all this is laid bare by Chris Martensen of Peak Prosperity who is an analyst that I have been listening to since I started studying Peak Oil about 15 years ago, famous for his Crash Course.

He is a voice of reason in a world of insanity, especially on themes relating to energy and finance.

Peak oil

He has always talked about the intimate relationship between oil and the economy. All modern economies are inseparable from oil.

Oil is not just another commodity but the primary energy input behind all transport, agriculture, manufacturing, and trade.

Much as the Left would tell us otherwise, we cannot survive as a modern economy without it.

Put simply, the more oil there is the more economic activity.

A shortage of cheaper oil leads to less economic activity,

Nothing illustrates this better than this graph

We can see from the above graph how oil production was declining after its peak in 1970 but the development of tight (or shale) oil - currently 70-80% of all production, has allowed America to become technically the largest producer in the world.

But the shale oil itself was nothing more than an unsustainable and damaging response to tight supply. Now there are signs that production of shale oil too, is starting to decline also.

The doubling of US oil production?

Trump keeps on saying that America is the largest producer in the world and has “plenty” to provide the rest of the world if only they would take it and America does not need oil from the Middle East, Russia or anywhere else.

He has also demanded that American oil companies double their output.

But that is about as true as anything that comes from Don Tzu’s mouth.

Chris Martensen used the graph below to demonstrate why Trump’s demand to double production is an impossibility.

The limits to manipulation

Disruptions to oil supply are ultimately governed by physical limits, not financial policy or political narratives.

You can manipulate things in a financial crisis - increase or reduce interest rates, print money but in this case you cannot manipule for long because you are talking about a confrontation with limits.

The global economy has been built on assumptions of abundant, cheap energy.

When that assumption breaks, the consequences cannot be deferred indefinitely.

Reality, in the form of physics and resource constraints, eventually reasserts itself.

Monetary policy can address liquidity problems, but it cannot create physical energy.

Attempts to suppress price signals only delay adjustment and increase the eventual shock when reality asserts itself.

Spot prices are a lot higher than futures prices

The first thing that leaped out at me from listening to the analysis below was something that was already clear to me and that is that the oil prices we see quoted every day are oil futures prices - in other words, paper oil in the same way we have paper gold and silver prices - as opposed to spot prices

The actual spot prices countries are paying to have oil delivered are much higher than that.

That is why we can have tankers headed for Australia turned round mid-ocean; someone somewhere is prepared to pay more for it.

America is a net importer of oil

Chris Martensen uses solid statistics to demonstrate that America is still a net importer of oil.

Countries are manipulating prices to maintain the illusion of stability

Not only that but America is endeavouring to keep prices down desperately, along with other countries (notably Japan which has no resources of its own), by calling on its own strategic reserves (remember when Biden did that), and exporting that oil to the world.

The oil market is being actively suppressed through the futures market. Governments and aligned financial actors are intervening to hold prices down, creating the appearance of stability.

However, this stability is illusory. It is achieved by drawing down inventories, releasing strategic reserves, and distorting price signals that would normally trigger reduced demand and increased supply.

This is unsustainable even over a short time frame.

The result of all this manipulation, says Martensen, is a dangerous feedback loop; artificially low prices encourage continued consumption, while producers—seeing weak future price signals—do not invest in new production.

The system is therefore consuming its buffers without replenishing them, deepening the imbalance over time.

Martensen gives a framework of the time before reality sets in as 2 weeks under normal circumstances, or 1 month at most under extreme intervention.

Introduce Mike Ruppert

Chris Martensen is gentle in his speech and inordinately kind to Trump, saying he is being given the “wrong advice”

In addition to pointing out the difficulties in reestablishing production associated with an unlikely fantasy version of an early end to the war, he correctly points out the fly in the ointment - the zionist entity, which clearly wants the whole thing brought down.

I’m sure my friend and major influence, Mike Ruppert would have expressed all this in a far more forceful, but no less credible, manner.

Basically everything Mike predicted is coming about even if in a very different manner from what he envisioned.

I strongly suggest to a new generation that is unfamiliar to these conversations that you pay very close attention to this analysis, as well as to Martensen’s earlier Crash Course, but also watch the much earlier movie Collapse, or to Apocalypse, Man, made not long before his death in 2014.

In particular, I recommend this documentary, Apocalypse, Man which I have not seen since it was released in 2013

It seems Mike Ruppert’s prediction that we are coming to an abrupt end to the era of human industrial society and the illusion infinite growth on a finite planet, is coming to an end in real time.