what would happen if oil supplies could not be guaranteed?

What can be read from the latest goings on in the ME is that absolutely nothing is guaranteed anymore. Political alliances that have endured for decades have ended and ended abruptly. This effectively means that the fragile stability in this region has also ended. The entire ME scenario that was already very complicated due to the existence of Israel becomes even more complicated politically. America’s influence in the region is now dependant on democratic movements that assume free and fair elections. The likelihood of this occurring is remote indeed if Iraq and Afghanistan are any example. What could be more astutely observed is that America has made some very bad strategic calls indeed. Saudi Arabia has huge influence in geopolitical terms simply because of the fact that it controls the balance of power in regard to oil supplies. While America is so dependant on importing oil to maintain its lifestyle; it makes absolutely no sense strategically to upset such an important ally. It is now being reported that Saudi Arabia is making noises that its political support in the region is shifting to more dangerous allies such as China and Iran after President Obama deserted Mubarak in Eqypt.

This all begs the question of what would happen if oil supplies could not be guaranteed and shortages should accrue for whatever reason. Undoubtedly prices would shoot up leaving more than a few countries at risk of severe economic collapse. It does not take a terrorist to figure out that the best way to derail any economic recovery would be through high oil prices that were sustained over a prolonged period.

Say hypothetically civil unrest broke out in Saudi Arabia and protestors sabotaged many oil facilities in the kingdom. Civil unrest ruled and during this time Saudi Arabia stopped exporting oil. In other words global oil supply was unable to match current world demand for a number of years.

Workers though out the OECD would begin to suffer the curse of rising prices that were not being compensated by rising wages. Indeed the rapid demand depletion of all manner of products and services would put extreme pressure on all manner of businesses to cut costs in any way they can to starve off bankruptcy as revenue collapsed.

A repeat of 2008 would occur however this time around the prognosis is not so good. As more and more people struggled to make ends meet; defaults on loans would increase. Soon banks would come under pressure as property prices fell. Governments would be required to come to the rescue to avoid a total financial collapse. Government debt would once again explode however this time around it may not be so easy to borrow.

Governments in desperation would begin to print money and in a short time; inflation would be completely out of control. Filial currencies would loose all credibility and soon the ability to pay for imported oil is not guaranteed.

Should this occur in a modern economy dependant on oil for either transport, heating or electricity then all hell would break loose. Severe rationing would need to be enforced and shortages would begin to accrue. Life for the average worker would be on a hiding to nothing. A severe depression would set in that would make the 1930’s look like a holiday camp. Law and order would be the first casualty and many governments would fall leaving behind chaos and anarchy.

One way to avoid this scenario is to dampen demand ahead of time. Jump onto the climate change bandwagon and pressure your politicians on the urgent need to take climate change seriously. Substantially increase the tax on all carbon products and use this tax to move the economy towards a sustainable ‘green’ future for the long term benefit of future generations.

The Peak Oil Catastrophe-In-Waiting

Audio by experts on oil production concerns

Financial Crisis

The odds of a financial crisis are almost inevitable if a person was to come out of denial about the gross mismanagement that has been going on in the OECD world in recent decades.
Democratically elected Governments have been completely blind sighted by the short term view and have assumed almost arrogantly that “this time it is different” or "the free market will save the day". They have allowed all manner of borrowing to get out of hand and forgotten the golden rule: Always have some money set aside in case of a rainy day. Now that the rainy day has come, where is all this money going to come from? The answers are all pretty much the same…

Either borrow more (no longer a realistic option for many), print more money (never overly sensible) or the more likely option of slashing budgets. Slashing budgets is hardly going to do wonders for the morale of the workers. Of course a government can default on its debt obligations...

Unfortunately slashing budgets in the 21st century is not the same thing as slashing budgets in the 20th century. Workers may have revolted in the 20th century at such ideas, but by and large societies back then were much more respectful of authority and just went along with what had to be done. This subservient mentality is fast disappearing with the onset of the baby boomers nearing retirement whose mentality is more akin to entitlement than sacrifice. The young of today have only known the good times. Faced with the prospect of decades of hardship they are likely to revolt big time as such prospects. Perhaps this is the one point that many of those in authority have somewhat overlooked. A financial crisis is one thing. A complete collapse of the underlying structure of society is another thing altogether.

The solution is simple in many ways. Avoid a financial crisis by acknowledging up front that the previous few decades have been a huge experiment with filial currencies. History has shown us the benefits of the boom times, but alas the bust times can be highly destructive. Oh well. Lets all sigh a big relief that nothing about money should be taken too seriously since it is only created out of thin air in the first place.

Why not just wipe the debt slate clean by every government defaulting on its debt en mass? After all, we are all pretty much in the same boat in the OECD. I am sure countries like China would understand and forgive our mistaken "capitalist" experiment that only requires some minor tweaking.

The major flaw of the capitalist system and how to prevent the next financial crisis.

It is only a matter of time before the proverbial hits the fan. The capitalist system as we know it is fatally flawed and the flaws are starting to create havoc with increasing regularity. The major flaw of the capitalist system goes something like this. It is dependant on growth…

While growth remains in the economy, the financial system which is based on credit or debt continues along swimmingly. Along the way it allows workers to take out loans at varying rates of interest to purchase all manner of items including homes and cars. More importantly it allows businesses and governments to invest in long term projects for the benefit of all.

However beware if something occurs to disrupt this relentless growth. (eg a financial crisis such as sub prime or rising oil prices) Then a correction of some magnitude is inevitable. In the worst case scenario workers and businesses start to default on their loans and risk adverse banks start to slow down their lending or invest in lower risk government bonds. In the extreme case governments need to bail out failing banks and take on additional debt. It then becomes a matter of time to allow the economy to remove the excesses from the system and once again return to historical growth levels. This is normally achieved by the government /s impacted learning again the need to balance their budgets through austerity measures or enacting temporary fiscal stimulus packages until the economy improves. There is nothing new in this and to some degree it can be anticipated through the cyclic nature of economic cycles. (ie a boom is inevitably followed by a bust)

Unfortunately this last boom cycle has resulted in unbelievable levels of debt for OECD countries that have long known the fruits of credit but have chosen to disregard the risks.
Now the only saviour for all these debt ridden governments is to hope and pray that the global economy returns to historical growth levels in a timely manner before all hell breaks loose. In the meantime they are faced with rather bleak choices. Ironically the only way to save their economies from deteriorating further is to take on more debt to pay for mounting budget deficits. The larger economies are resorting to the more risky last resort of quantitative easing and where possible, expensive stimulus packages that are not guaranteed to succeed.

Either way the clock is ticking. Budget deficits are now completely out the question on an ongoing basis and any further quantitative easing runs the risk of a rapidly deteriorating currency.
Restoring government budgets to surplus is no longer an optional luxury. It has become a necessity and a necessity that is measured in years and not decades. Along the way, everyone’s standard of living in the OECD is slowly but surely falling. Taxes are on the way up and if taxes are not going up then you can be certain that austerity measures are not too far away.

Moving forward…
The dreaded truth about this elaborate and evolved capitalist system centred on “money” is that the raw substance that makes this financial system so successful is created from thin air. It is nothing more than an elaborate and well thought out confidence trick that is designed to create the right incentives for men to work to advance societies over time. It has proved to be the fairest way to share wealth in the modern world after taking into account the inherent nature of man’s flaws and the varying percentage of men who are dishonest and or lazy. It certainly has worked to advance societies and increase the standard of living of man generally in the 20th century. (albeit to varying degrees depending on where in the world you live)

Unfortunately this elaborate and well thought out system is now out of date with modern day global realities in the 21st century. Why it has worked well in the past was largely because the world had been divided into two. While the second half’s development was much lower, access to global resources such as oil was effectively unlimited. Now that the second half of the world is catching up, serious problems loom because supply for resources can no longer keep up with demand.

2008 was a window on how this situation creates financial chaos leading to a lack of confidence generally, but especially in our current financial system. Should this scenario occur again there is a substantial risk that filial currencies would collapse one after another. Then the financial future is much less certain although one thing can be almost guaranteed. Disorder and major disruptions. The standards of living for billions of people will fall. The potential for mankind to advance societies to the next level will take a back seat to resource wars and anarchy.

It is in all our best interests to ensure that this eventuality does not occur. The change that I am proposing is hardly likely to come easily. It involves adding an additional layer of government that ultimately has full control of the world’s finances. In some ways we already have this layer of government however the United Nations hardly funds itself at the moment. Therefore the first step is to allow the United Nations to create its own Federal Bank and take control of the worlds finances.
Once this occurs the UN will vastly increases its authority over what occurs on this planet. The UN will work in consultation with all world governments to immediately tackle the world’s most pressing issues such as poverty that occurs due to issues around inequality. Other pressing issues include taking immediate steps to plan for climate change and to work on an equitable way to share the planets limited resources in a manner that is fair and sustainable for future generations. The end game is simple: change the way the planet is governed so that the interests of all the species on the planet are the first priority and not the interests of any one country or a few powerful elite.

In reality convincing the average man of the necessity for this decision is hardly likely to be straightforward. For a start who exactly represents the UN? In an instant a political football is let loose that can only be solved by something called consensus. Every country needs to agree to submit to a new authority whose decisions they may or may not agree with. Then there are a myriad of issues over what exactly qualifies as human right abuses.

Credit Revolution

Credit Revolution
The ongoing success of the capitalist system is dependent on the ongoing credibility of the trading commodity on which the capitalist system is based. Today that trading commodity is undoubtedly access to credit. Yet credit comes at a cost and this cost is called interest. Interest for its part is a double edged sword. Although interest is an efficient market mechanism to take into account risk, the downside is that interest by necessity must add to the global money supply since a borrower must pay back a sum in addition to the principle.

This means that whenever interest rates are above zero, the money supply must be continuously increased so that interest payments can be logically made. (otherwise the entire capitalist system would collapse) How is this possible in a closed system?

The logical answer is that this extra money supply is created out of thin air akin to a conjurers trick. Once you understand this grand illusion a person can quickly come to some rather startling conclusions. Why not simply take advantage of this grand illusion to create even more credit. Then use this extra credit to tackle the worlds most pressing problems like poverty and climate change.

Fires, flooding fit into climate change predictions

This summer's weather disasters fit into the pattern forecast by climate scientists in key 2007 report on global warming
NEW YORK — Floods, fires, melting ice and feverish heat: From smoke-choked Moscow to water-logged Pakistan, the planet seems to be having a midsummer breakdown.
The weather-related cataclysms of July and August fit patterns predicted by climate scientists, the Geneva-based World Meteorological Organization says — although those scientists always shy from tying individual disasters directly to global warming.
The experts now see an urgent need for better ways to forecast extreme events like Russia's heat wave and the record deluge devastating Pakistan. They'll discuss such tools in meetings this month and next in Europe and America.
"There is no time to waste," because societies must be equipped to deal with global warming, British government climatologist Peter Stott said.
The U.N.'s network of climate scientists — the Intergovernmental Panel on Climate Change — has long predicted that rising global temperatures would produce more frequent and intense heat waves, and more intense rainfalls. In its latest assessment, in 2007, the Nobel Prize-winning panel said these trends "have already been observed."
Still, climatologists generally refrain from blaming global warming for this drought or that flood, because so many other factors also affect the day's weather.
Stott and NASA's Gavin Schmidt, at the Goddard Institute of Space Studies in New York, said it's better to think in terms of odds: Warming might double the chances for heat waves, for example. "That is exactly what's happening," Schmidt said, "a lot more warm extremes and less cold extremes."
The World Meteorological Organization noted that this summer's events fit the international scientists' projections of "more frequent and more intense extreme weather events due to global warming."
Russia
• This summer: It's been the hottest summer ever recorded in Russia, with Moscow temperatures topping 100 degrees Fahrenheit for the first time. Russia's drought has sparked hundreds of wildfires in forests and dried peat bogs, blanketing Moscow with smog that finally lifted Thursday after six days. The Russian capital's death rate doubled to 700 people a day at one point. The drought reduced Russia's wheat harvest by more than one-third.
Forecasters said Thursday the heat wave could break next week, though cooler weather and rainfall might come too late to save winter crops.
• The 2007 Intergovernmental Panel on Climate Change report: The panel predicted a doubling of disastrous droughts in Russia this century and cited studies foreseeing catastrophic fires in dry years. It also said Russia would suffer large crop losses.
Pakistan
• This summer: The heaviest monsoon rains on record — 12 inches in one 36-hour period — have sent rivers rampaging over huge swaths of countryside, flooding thousands of villages. It has left 14 million Pakistanis homeless or otherwise affected, and killed 1,500.
A shipload of U.S. Marines and helicopters arrived to boost relief efforts Thursday, but Prime Minister Yousuf Raza Gilani said his country needs more international help to cope with one of the worst natural disasters in its history.
• The 2007 report: The climate panel said rains have grown heavier for 40 years over northern Pakistan — a warmer atmosphere can hold and discharge more water — and it predicted greater flooding this century in South Asia's monsoon region.
China
• This summer: China is experiencing its worst floods in decades, particularly in the northwest province of Gansu. There, floods and landslides last weekend killed more than 1,100 people with more than 600 others missing, feared swept away or buried beneath mud and debris. More rain was forecast in the coming days — up to 3.5 inches was expected today — and China's National Weather Center said the threat of more landslides was "relatively large."
Flooding in China has killed more than 2,000 people this year.
• The 2007 report: The climate panel said that rains had increased in northwest China by up to 33 percent since 1961, and floods nationwide had increased sevenfold since the '50s. It predicted still more frequent flooding this century.
Arctic
• This summer: Researchers last week spotted a 100-square-mile chunk of ice calved off from the Petermann Glacier in Greenland. It was the most massive ice island to break away in the Arctic in a half-century of observation.
In the Arctic Ocean, satellite data show the ocean area covered by ice last month was the second-lowest ever recorded for July.
• The 2007 report: Scientists at the National Snow and Ice Data Center and the National Center for Atmospheric Research reported this spring that the Arctic ice cover is retreating more rapidly than estimated by any of the 18 computer models used by the Intergovernmental Panel on Climate Change in preparing its 2007 assessments.
Changes in the ice sheet "are happening fast, and we are definitely losing more ice mass than we had anticipated," NASA scientist Isabella Velicogna said

environmental disaster

Five weeks later and the oil spill in the Gulf of Mexico is getting worse. At the same time; clean up efforts have barely begun. This is a man made environmental disaster that thwarts all others in its likely implications. Serious questions are now being asked by many Americans. Not that any answers are likely to make any difference to the dreaded facts. All attempts by BP so far to cap the oil flow have met with few hard results. The latest attempt to blow debris into the well head directly is thus far not meeting expectations. There is a risk that it could be making things much worse.

Vast quantities of Oil and gas continue to flow with some pressure to the surface of the sea floor without undue hindrance. As you can imagine, 5 weeks without due hindrance means that one heck of a lot of oil and gas have escaped to the surface. This is estimated between (BP) 5000 and (Oil Volume Experts) 70000 plus barrels of oil each and every day.

Highly toxic dispersant s may have broken down some of the oil to prevent it from floating to the surface so easily, but it appears that the dispersant s in use are highly classified. They are relatively untested, and never tested in such large quantities as have been used thus far. One thing you can guarantee though. They are bound to be deadly toxic to many species. (much like the oil they are dispersing)
As for the notion of using boons to halt the advance of any oil that may make its way to the shore via the ocean surface; it is not working. It would appear that the effective staff training on competent boon use by BP was highly exaggerated. (much like BP's impressive safety record)

For anyone still holding shares in BP, now could be a good time to sell. The likely costs associated with this mess simply boggle the mind. All these mounting costs are directly the responsibility of BP.

The implications are vast and also boggle the mind. Where now is all this oil going to be found now that deep sea oil is proving so hazardous? (assuming we still need vast quantities of oil to help run our economies)

risk management

I may be speaking out of turn here, but this is definitely something to ponder.

It would appear from recent events that responsible risk management seems to be a difficult subject for banks to master.

As for the giant oil spill in the Gulf of Mexico. A disaster such as this could theoretically never happen.

Who exactly is in charge of this risk assessment process? I only ask this question because whoever is in charge. These people need to be fired...(or at least demoted)

The dreaded truth is that only a small minority are really that interested in politics. The rest think it is kind of cool to pass on this subject and talk about something else.

The bottom line is that these people who choose to be ignorant about politics are only slightly more evolved than sheep. The world is the way it is because of politicians and the sad fact is that we elected them there.
We only have ourselves to blame for the way things are turning out.