For almost two years, by combining various points of view
(speculative, geopolitical, technological, economic, strategic and
monetary…), we have continued to anticipate a major crisis in the entire
oil sector.
Today, no one doubts the fact that we are actually at that point, and
the GEAB [GlobalEurope Anticipation Bulletin] must therefore anticipate the consequences of this veritable
atomic bomb, which has begun to blow up all the old system’s pillars:
everything which we have known, international currencies, financial
markets, the US, the Western alliance, world governance, democracy, etc.
Global systemic crisis: the end of the West we have known since 1945
Here, we would like to look back on a historic GEAB anticipation,
that of Franck Biancheri in February 2006, which announced the beginning
of the global systemic crisis under the title “the end of the West we
have known since 1945” (1). It will have taken nine years for this
Western world to collapse (or seven years, if we begin the process with
the 2008 subprime crisis, as one should really do)… During these nine
years, the GEAB has worked to educate on the crisis, with the avowed aim
of raising all the existing solutions to exit it as quickly and as
painlessly as possible. Apparently, outside the work carried out by the
BRICS which, also anticipated by the GEAB, got through a huge task to
lay down the foundations of tomorrow’s world, the Western world,
meanwhile, has made some positive efforts here and there, signs of which
we detect in some places. But at the end of 2014, and after the huge
destabilization caused by the crash of Euro-Russian relations in the
Ukrainian crisis, our team is struggling to put forward a positive
scenario for the coming year.
2015 will show the complete collapse of the Western world we have
known since 1945. It will be a gigantic hurricane, which will blow and
rock the whole planet, but the breach points are to be found in the
“Western Port”, which hasn’t been a port for a long time but, as will be
clearly shown in 2015, has been in the eye of the storm in fact, as we
have repeatedly said since 2006. Whilst some boats will try to head
offshore, the Ukrainian crisis has had the effect of bringing some of
them back to port and firmly re-mooring them there. Unfortunately, it’s
the port itself which is rocking the boats and it’s those with the
strongest moorings which will break up first. Of course, we are thinking
of Europe first and foremost, but more so Israel, the financial markets
and world governance.
Of course peace is at stake, a peace which is no more than a vain
word, moreover. Ask China, India, Brazil, Iran, etc., if the West still
conveys any image of peace. As for democratic values, what we show
serves more as a foil than a model… to the extent that the universal
principle of democracy is relegated to the value of culturally
relativized concepts and finishes by serving antidemocratic agendas of
all ilks, in Europe and elsewhere. Yet it’s not the democratic principle
that is the problem (quite the opposite is needed to reinvent ways to
apply it, in partnership with the new emerging powers), but really the
West’s inability to have known how to adapt its implementation to
society’s new characteristics (the emergence of supranational political
entities, the Internet which is transforming the social structure..)
The oil crisis is systemic because it is linked to the end of the all-oil era
Let’s return for a moment to the principal characteristics of this
systemic oil crisis which we have analyzed. To quickly summarize and to
highlight the systemic nature of this crisis, to better position our
anticipations which follow, it’s the oil market’s world governance
system OPEC,
which has been undermined. The US, which was its master until around
2005 (2), has seen the arrival of the emerging nations whose levels of
consumption has inevitably made them joint masters.
Oil consumption: in red, by the US, Western Europe and Japan; in
blue, by the rest of the world. Source : Yardeni / Oil market
intelligence.
Of course, it would have been necessary to acknowledge
this change by a reform of the old system of governance to put
everybody in the same boat. Instead, frightened by the idea of a rise in
oil prices to which the US economy (totally dependent on oil, unlike
Europe, and lacking any significant and coordinated investment in
renewable energy) was unable to resist, the US decided to break any
rationale of global coordination by creating a competing market, the
shale market, intended to reduce prices. Unfortunately, we know what
competition in terms of access to energy resources leads to… at least
Europe is supposed to know (3).
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US shale oil production – Source : HPDI, LLC |
Another strong
trend is combining with this major trend break, currently little
mentioned in the media, that of the end of oil as the world economy’s
primary energy source. And it is this second factor that now makes the
situation totally uncontrollable. Prices are falling apart because the
oil era is coming to an end and nobody can do anything about it. We
anticipated this many months ago (4) : China is creating an all electric
car fleet (5), and, in so doing, will turn the global car fleet into an
all-electric one: once the technology has been mastered and mass
production becomes inevitable, all the world will go electric. We
anticipated that this transformation would be in place in less than 10
years and that, in five years, the turning point as regards consumption
would be reached. But a year at least has passed since this
anticipation. Speculators of all stripes are starting to see a horizon
four years out (6).
In reality, « peak oil » is what LEAP calls a “successful
anticipation”: putting it into perspective, has allowed the problem to
be “avoided”. Fear of a shortage and a price explosion, good and bad
avoidance strategies (renewable and shale), all combined with a huge
economic downturn and, as a grand finale, and an ecological agenda whose
resumption we will see from this year (7), and the world is “ready” to
close the oil era… except that, to this, the players existentially
related to this commodity will make themselves heard loud and long
before disappearing.
Here again, so that our readers don’t misunderstand: for a long time
oil will continue to be used to fuel the world’s engines and factories
(it even has many years ahead of it again since the risk of shortage has
been postponed for several decades), but the “era” of sovereign oil is
ending and, of course, that constitutes a systemic change.
In the Telescope section we further examine the consequences of this
systemic oil crisis, particularly on the financial markets. These
financial markets, which have well “resisted” six long years of crisis,
suffocating the real economy in their vice and proving the extent to
which they were the crux of the problem, will not be able to survive the
shock that they are about to get, from the oil industry on the one hand
(a central player), and the dollar on the other (financial world’s main
tool). But, as if it weren’t enough, other bombs are ready to explode…
Notes
(1) Source : LEAP/Europe2020, 15 February 2006
(2) In
fact, the beginning of the rise in oil prices dates from 2003, and began
to explode in 2006. But 2005 is a recurring date as soon as we analyze
price increases in terms of the emerging nations’ consumption instead of
the vagaries of Middle Eastern geopolitics, and generally as soon as
one sees the emerging nations’ rise in power.
(3) The two
world wars at the beginning of the 20th century were intrinsically
linked to competition for access to energy resources (source: Cambridge Journals,
09/1968), which is why, at the end of the Second World War, the
European Communities gave birth to the pooling of resources, the ECSC
(source :Wikipedia ),
a project which should have remained one of the lightning conductors of
European construction, whilst today the Ukrainian crisis reveals the
gaping hole in Europe as regards a common energy policy. And to say that
some find that we suffer from too much Europe!! Actually, European
construction came to a halt in 1989… busy regulating the size of
cucumbers and freeing the rest: “the European cucumber”…
(4) In our recommendations last January (GEAB N°81) under the heading « China goes electric ». Source :LEAP/E2020, 15/01/2014
(5) Source : Bloomberg, 09/02/2014
(6) For
those who doubt the reality of this development there is the recent and
incredible decision by Germany (incredible because it’s completely
counter intuitive to the current decline in oil prices) to bet
everything on renewable energy and package everything which is
nuclear-gas-oil-coal to get rid of it Source :Deutsche Welle, 01/12/2014
(7) Last
month we noted the very tangible results achieved in promises to reduce
CO2 emissions, including from the US, under Chinese leadership. And
although the Lima Summit hasn’t seemed to produce much in the way of
results meanwhile, it’s particularly because the poor countries are
pretending to continue to believe that Western dollars are going to
finance their energy transition. But in substance, the environmental
agenda is very dynamic currently, essentially because it coincides with
the strategic objectives for the first time of the world’s first (or
second) power, China.
Source: Global Research
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