As The Economist noted yesterday:
To gauge how close the world is to energy catastrophe, The Economist has gathered a dashboard of indicators. It suggests that grave damage has already been done. Worse, without a reopening costs could soar, triggering events that cause the fuel system to seize up. A reopening of the strait now would—just—avoid a complete disaster. But some additional pain is already inevitable.
Three factors are pushing the world towards the cliff edge. Oil cargoes available to buy are drying up. Refineries are slashing output of fuel. And demand remains artificially high, especially in Europe. Something big must give somewhere large for energy markets to balance.
They added:
[M]odelling ... for The Economist shows that European stocks will fall precipitously if Hormuz flows do not normalise by June.
So, what is this all about?
First, as The Economist notes, the global energy system is not adjusting smoothly through price signals, as orthodox economic models suggest it should. Instead, market demand is being propped up by policy intervention, most especially through short-term inventory depletion. Politicians are maintaining the pretence that all is "normal".
This creates the risk of a sudden and disorderly adjustment when physical shortages can no longer be masked. When that happens, there might be what The Economist calls a systemic “seizing up” of energy markets.
And as they already note, the burden of adjustment is already falling unevenly, with poorer countries and sectors facing rationing and shutdowns first, while wealthier regions in the world and wealthier groups are seeing delays in the impact of this change because of the impact current fuel supply policies in many countries, including, to some degree, in the UK, most of which are avoiding the rationing we need.
The reality is we need fuel rationing, and we need it now. Our politicians are failing us very badly, February 2020 style, by pretending otherwise, and when reality hits, as it will, as there is no end to this war in sight, as I note this morning, things are going to get very uncomfortable indeed.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
[…] Trump has said he wants new talks, but his team is not in Pakistan to take part. Why? Because Iran says it will not turn up until the US stops the blockade on its shipping, which is just about the only military action the US can now undertake, given the crisis it has created in its own military stocks due to the depletion they had already suffered in this war, about which I spoke some time ago. The consequence is that there are no peace talks at present, whatever is being said, and the Strait of Hormuz remains closed, with all the dire consequences I have discussed on this blog for some time, and again this morning. […]
I understand and I dont remember where I saw it so it may have been here that a lot of the equipment that has been damaged or destroyed in the Gulf is ‘unique’ and no replacements or spares exist. Instead the components will need to be made and the lead times may be measured in years.
Last time Petrol came close to £2/L I was talking to someone who had a traction engine with a ‘Colonial’ ie wood burning firebox, I just hope his boiler is still ‘in ticket’ as it may soon be in demand
The government seems oblivious to the problem acting as if everything is fine. It further illustrates their incompetence and total to inability to govern. They could start to take some measures now such as reducing the speed limit on roads from 70 to 60. But they seem incapable of even that minor change. The BBC continues to talk about people flying around as if thats fine. {I have only ever flown on a few occasions but now would not do so]. What more can be said? Can we have a government which has capable people in it? Oh the BBC had a discussion about the monarchy the other evening and how important it is for the country. I give up!
We need energy lockdowns, which will prepare us for the inevitable decline of capitalist industrial modenity that awaits us.
The government already knows that “renewables” cannot sustain business as usual:
https://assets.publishing.service.gov.uk/media/57a08a0340f0b652dd000508/60999-EROI_of_Global_Energy_Resources.pdf
It’s interesting that this supply and demand problem is exactly what “the market” is supposed to resolve. Yet it’s not working and government is interfering.
You would think that with a little self reflection they would realise that “the market” isn’t all it’s cracked up to be
I have previously confessed I am a petrol head. That doesn’t mean I race about everywhere. I assiduously observe all speed limits already. I have a ROSPA gold advanced driving certificate and I have competed in economy runs. As of a few weeks ago, and prurely in my own personal interests, I have been using those techniques to try (farly successfully) to reduce my fuel consumption. I have found that with my present car my most economic speed is 50 mph. So I agree with Peter that the government should put in place a national speed limit of 60 mph immediately with a view to reducing it further to 50 as the crisis deepens. I remember that happening in the seventies and mostly people complied. I also remember driving in the US when the speed limit was 50 in most states on dead straight, seemingly endless, roads. We should live with it. The government should certainly take this action but they just sit there hoping the problem will somehow miraclously go away. It won’t.
Much to agree with
I agree with the fact that rationing is needed – and was needed from 28 February. I wrote to my MP three weeks ago about this (Tessa Munt – Liberal Democrat) and did receive a prompt reply. This entirely missed the point as it went on about reducing the cost of fuel through tax reductions, i.e. actually encouraging increased consumption of a soon-to-be scarce resource! Are they worried about “frightening the horses”?
Surely it isn’t beyond the wit of man to identify essential fuel needs as distinct from discretionary consumption. I am reminded, however, of a conversation I had with a member of a major life insurer’s property portfolio management team a few years ago. I asked him what big out-of-town shopping malls would look like in, say, 2030. His answer was succinct – “Tumbleweed”. The point being that as independent personal transport choice is reduced as fuel for either ICE or EV cars becomes ever more expensive because of scarcity, no-one will be able to visit these gross palaces of consumption.
Much to agree with
I wrote to my MP about this and got a completely rubbish reply which sounded to me like f-off at best. I even sent a link to your post about rationing from a few weeks back. I don’t think the government is plugged in to reality. This is a scary situation because it feels the bus is headed off a cliff and there isn’t anyone driving it.
I think you are right
As Seneca wrote in about AD50
Fortune is of sluggish growth, but ruin is rapid (Letters to Lucilius, 91.6)
The so-called “Seneca Cliff”. The Roman Empire arguably collapsed because of energy scarcity – they ran out of wood – and history is littered with many examples of energy depletion or destruction causing the collapse of regimes & empires.
Today, we face a looming acute shortage of oil products (kerosene, diesel, jet fuel) which, unless politicians get themselves in order, might be Seneca-cliff like in effect, and “no-one knew”!
Much to agree with
1. Rationing.
2. All US bases closed in the UK (& Europe). No flights no anything – they can go home (just like the Russians in Eastern Europe – 1990s)
3. Israeli embassies closed & all Israelis given two days to leave the UK & EU.
4. No flights no commerce with Israel – UK & EU borders sealed wrt Israel, its people & goods.
tRump freaks out. Net & Yahoo freaks out. Israeli population (90% support invasion of Lebanon) freaks out & gets a wake up call – no hols in Europe.
Suddenly a deal with Iran is not so diff because 100% of the Israeli pop’ are shouting & waving their arms for one.
Notice, no guns, no weapons, nobody got hurt – but a lot of people understood, quickly that genocide and invading neighbours has consequences.
Question: why is none of the above proposed by the current crop of self styled “leaders” in the UK and EU?
Answer: becuase for reasons unknown they think they have to kow-tow to Israel – whilst at the same time happy to see their populations being screwed so Israel can keep its on-again/off-again war with Iran going. Begs the question doesn’t it – why is Israel & its needs more important than, UK citizens (or EU citizens) and their needs? Something to ask politicos.
It is estimated that the world’s current oil reserves are enough to last about 45-50 years.
That time frame has been put into jeopardy only because of the actions of 2 countries that are deliberately destabilising the region.
Otherwise there is plenty of time to transition to other energy sources.