Got an email today from my Head of Department suggesting a conference on fragile states. This was my response: “Hi, I quite like this, but I would like to include reference to the fact that the spread of fragile states is being driven by limits to our current use of strategic resources, with water, food and oil at the nexus of this crisis. Oil for example, is in trouble: to cover the costs of accessing ‘non-cheap oil’ (which is all we have left), the price must be higher – but a higher price undermines growth which reduces demand. And so the cycle goes – the Secretary of State (whose real job is CEO of ExxonMobil) is to resolve this, which is only possible with more wars to force price reductions by backrupting more countries. The issue, therefore, is not peak production, but peak demand. The result is price volatility and a growth malaise that Trump will fail to resolve. The alternative lies in the rise of renewables, now cheaper than fossil fuels in 60 countries (including SA). But for this transition to have its full effect, we may need to transcend the current model of short-termist, financialised capitalism that needs growth to avoid debt from destroying the global economy. But rising debt is what compensates for declining EROI (Energy Return on Energy Invested – from 100:1 in the 1930s to 10:1 today). Debt-based capitalism is a ticking time bomb, and the root cause of failing states. The US state as a failed state is a case in point.” (For a good reference on all this see Nafeez Ahmed’s book on Failing States)
Fragile states and sustainability
by Mark Swilling | Mar 21, 2017 | Blog | 6 comments
Very little attention is paid, in the current debates on fragile states to which I have been exposed, are 2 key issues.Firstly, that there is a global pattern of low/no growth in many countries which restrains the implementation of anything beyond basic service provision by governments.Secondly, the levels of national debt as a hangover from the 2008/9 global recession, is not out if the systems of many states and won’t be for the forseeable future.As an overview, I believe that the outlook for the future is that planned development interventions in many countries will not be implementable due to budgetary constraints.The consequence of this will be general and widespread dissatisfaction by those most impacted by these cuts and restraints
Very little attention is paid, in the current debates on fragile states to which I have been exposed, are 2 key issues.Firstly, that there is a global pattern of low/no growth in many countries which restrains the implementation of anything beyond basic service provision by governments.Secondly, the levels of national debt as a hangover from the 2008/9 global recession, is not out if the systems of many states and won’t be for the forseeable future.As an overview, I believe that the outlook for the future is that planned development interventions in many countries will not be implementable due to budgetary constraints.The consequence of this will be general and widespread dissatisfaction by those most impacted by these cuts and restraints
…to 2 key issues…
…to 2 key issues…
My thinking on these issues mirrors yours Mark. Just a couple of nuances perhaps: I’m not sure one can fully separate peak oil supply and demand. If conventional oil hadn’t peaked around 2008, global growth might not have been languishing as much as it has been (the other driver being debt overhang and austerity), as demand in the west would likely have been stronger. The rising marginal cost of production (for unconventional oil) has put a floor under oil prices, and helped spur demand-side adjustments (less driving, more efficient vehicles, greater uptake of EVs although off an extremely low base). But oil around $100 slammed the breaks on the global economy, just as it did in the 70s. The adjustments take time. Also, some parts of the world (e.g. Iraq) do still produce oil very cheaply, less than $10/bbl, but the issue is marginal costs for shale oil and oil sands and ultra-deep water oil. The oil price crashed because of a relatively quick surge in shale oil output, which in itself was something of a mirrage because it was Wall Street’s latest debt-fuelled bubble (most shale companies have made very little in profits), coupled with a change in tactics by the Saudis to regain market share. Two key questions in my mind are (1) how quickly can renewables with decent EROI be scaled up and (2) can the financial system be reformed without a devastating crash-and-reboot. For both to happen more smoothly, we’d need political shifts opposite in direction to the Brexit/Trump/right wing populist tide.
My thinking on these issues mirrors yours Mark. Just a couple of nuances perhaps: I’m not sure one can fully separate peak oil supply and demand. If conventional oil hadn’t peaked around 2008, global growth might not have been languishing as much as it has been (the other driver being debt overhang and austerity), as demand in the west would likely have been stronger. The rising marginal cost of production (for unconventional oil) has put a floor under oil prices, and helped spur demand-side adjustments (less driving, more efficient vehicles, greater uptake of EVs although off an extremely low base). But oil around $100 slammed the breaks on the global economy, just as it did in the 70s. The adjustments take time. Also, some parts of the world (e.g. Iraq) do still produce oil very cheaply, less than $10/bbl, but the issue is marginal costs for shale oil and oil sands and ultra-deep water oil. The oil price crashed because of a relatively quick surge in shale oil output, which in itself was something of a mirrage because it was Wall Street’s latest debt-fuelled bubble (most shale companies have made very little in profits), coupled with a change in tactics by the Saudis to regain market share. Two key questions in my mind are (1) how quickly can renewables with decent EROI be scaled up and (2) can the financial system be reformed without a devastating crash-and-reboot. For both to happen more smoothly, we’d need political shifts opposite in direction to the Brexit/Trump/right wing populist tide.