The year of peak oil and depletion: 2015 and beyond

A German military think tank has been conducting a study about the possible impact of peak oil on the global economy, international trade and manufacturing activity in general. The report was leaked to the German magazine “Der Spiegel” on September 1 and focuses on seven main topics and potential impacts.

• Der Spiegel article summarized and translated

Peak oil is defined as the moment in time in which the maximum rate of oil extraction is reached after which a terminal decline in production occurs.

The study, conducted by the Deutsche Bundeswehr, shows that the German Government takes the issue of peak oil very seriously and expects to be impacted directly given its manufacturing and export driven economy.

The seven points below are a brief summary:

-Oil and power.
Oil producing economies and countries are becoming more important in the international and global economy. The advantage of peak oil may be used by certain nations to expand their domestic and foreign policies to establish themselves as new regional or global powers.

-Oil exports.
As oil production reaches and passes its peak, more importing countries will seek favorable foreign policies versus the oil producing nations and will result in more aggressive political assertions thereby shifting the balance of political power.

-Politics and the market.
The study points out that the world may witness another oil crisis similar to the 1970s caused by conditional and privileged agreements or partnerships between oil producers and oil consumers.

-International trade.
Since the manufacturing and transportation of goods is dependent on the availability of oil, the study predicts that international trade will be affected by peak oil primarily in our food supplies. The study foresees a large tax hike as a result of shortages in basic goods.

-Market failure.
A partial or complete failure of international markets may occur given their heavy dependency on oil. The study points out that government rationing and/or important goods allocations could replace the free market driven mechanisms during a crisis.

-Global discrepancies.
It will not be possible for all local or continental economies to react to a peak oil crisis in the same way. Some economies will not have sufficient time or the required investments to alleviate the peak oil crisis and replace their demand with adequate alternative energy sources.
The study points out the vulnerability of Germany if economic crashes were to occur in our global economy given its high dependency on export and its tight integration in the global economy.

-Survival of democracy.
The impact of peak oil may be perceived by parts of the population as a generic failure or collapse of the system. This may pave the way for more ideological and extremist alternatives and a fragmentation of the population may lead to open conflict in some extreme cases.

The study and report was conducted and published by a military think tank and may therefore be carefully viewed as heavy handed or extreme.

In any event, the warning about peak oil and its possible economic impact should not so easily be ignored either.

One can draw a safe and intelligent conclusion which is that it is time for countries to continue to look for alternative energy sources and implement the technology now in order to sustain the future impact of oil depletion which is expected to occur in 2015 according to some sources.

Written by Nick Doms © 2010, all rights reserved.