The German Military Believes ‘Peak Oil’ May Bring About the End of Democracy and Free Markets

Hubbert Peak Oil

Hubbert peak oil plot. Chart: Hankwang (CC)

Der Spiegel reports that a German military think tank believes ‘peak oil’ may occur this year, and that it could cause the collapse of both democracies and free markets within 30 years.

The political and economic impacts of peak oil on Germany have now been studied for the first time in depth. The crude oil expert Steffen Bukold has evaluated and summarized the findings of the Bundeswehr study. Here is an overview of the central points:

  • Oil will determine power: The Bundeswehr Transformation Center writes that oil will become one decisive factor in determining the new landscape of international relations: “The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading powers.”
  • Increasing importance of oil exporters: For importers of oil more competition for resources will mean an increase in the number of nations competing for favor with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, “this could result in a more aggressive assertion of national interests on the part of the oil-producing nations.”
  • Politics in place of the market: The Bundeswehr Transformation Center expects that a supply crisis would roll back the liberalization of the energy market. “The proportion of oil traded on the global, freely accessible oil market will diminish as more oil is traded through bi-national contracts,” the study states. In the long run, the study goes on, the global oil market, will only be able to follow the laws of the free market in a restricted way. “Bilateral, conditioned supply agreements and privileged partnerships, such as those seen prior to the oil crises of the 1970s, will once again come to the fore.”
  • Market failures: The authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. “Shortages in the supply of vital goods could arise” as a result, for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”
  • Relapse into planned economy: Since virtually all economic sectors rely heavily on oil, peak oil could lead to a “partial or complete failure of markets,” says the study. “A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”
  • Global chain reaction: “A restructuring of oil supplies will not be equally possible in all regions before the onset of peak oil,” says the study. “It is likely that a large number of states will not be in a position to make the necessary investments in time,” or with “sufficient magnitude.” If there were economic crashes in some regions of the world, Germany could be affected. Germany would not escape the crises of other countries, because it’s so tightly integrated into the global economy.
  • Crisis of political legitimacy: The Bundeswehr study also raises fears for the survival of democracy itself. Parts of the population could perceive the upheaval triggered by peak oil “as a general systemic crisis.” This would create “room for ideological and extremist alternatives to existing forms of government.” Fragmentation of the affected population is likely and could “in extreme cases lead to open conflict.”

Read more at Der Spiegel

21 Comments on "The German Military Believes ‘Peak Oil’ May Bring About the End of Democracy and Free Markets"

  1. Is someone else finally prognosticating this at last? It should have been clear by now that, despite claims to the contrary, much of American neo-con foreign policy and military strategy has been aimed at securing oil stability in advance of coming shortages…because the US’s ability to keep a stranglehold on the world stage, and act as the major player it has always been, is tied inextricably to our access to (comparatively) cheap oil.

    Oil is tied to everything. From our clothes and furniture, our computers and televisions, even down to our waste products and their removal. The price of every good and service in the US is linked to the cost of oil to some degree or another. If a contest starts between whether oil resources should be saved for our military needs or our public consumption…guess who will lose.

    I don’t push for an end to oil dependence just because it might soothe Middle eastern woes or prevent pollution. I have more selfish goals in mind. I want secure, renewable energy available for public consumption because I’m that public and I’d like something left to keep my lights on when oil for anyone other than government agencies spikes through the roof in price. It may not happen tomorrow…or even next year, but it will happen.

    I’m not the only one gambling on this…so is every major neo-con think tank, and damned near every investment house in the world. And hey…what’s the harm if we’re wrong and acted in advance anyway? Renewable power already in place and usable? Ooooo…whatta nightmare. So why not get ahead of the program and push hard for new sources of energy that aren’t subject to wild inflation and easy speculation? Wind and sun aren’t always there exactly when you need them…but inevitably, they do show up with regularity. Oil and gas, on the other hand…not so much.

    • Haystack | Sep 4, 2010 at 4:13 pm |

      I think that most people are on the same page as you at this point. The question is whether our economy can shift away from oil fast enough. Guys like James Howard Kunstler, who has been harping on this since the 70’s, have a pretty dim view. His take on it is that we’re deluding ourselves into imagining that we can find alternative energies/fuels that will allow ourselves to keep living as we have–that once oil prices spike the economy will experience a series of cascading, systemic failures, and we’ll all go back to raising chickens.

      It’s a complicated issue, and I personally have a “wait and see” attitude towards it. The recent banking failures we’ve experienced don’t really inspire me with confidence in the people running the economy. However, I have a feeling that someone will come along shortly to lecture us on the infallibility of Adam Smith. *g*

      • “Such regulations may, no doubt, be considered as in some respects a violation of natural liberty. But those exertions of the natural liberty of a few individuals, which might endanger the security of the whole society, are, and ought to be, restrained by the laws of all governments; of the most free, as well as of the most despotical.” – Adam Smith, The Wealth of Nations

      • Vox Penii | Sep 4, 2010 at 6:29 pm |

        “I think that most people are on the same page as you at this point.”

        Speak for yourself, hombre.

        And Kunstler’s work is about 90% speculation.

      • we’re not going to keep living how we’re living. our lifestyles are unsustainable and full of shit. things are going to get way better.

      • Kunstler isn’t without a point…as far as the systemic failure of systems…but I expect they’ll be driven by high prices…not total unavailability. Solar holds more promise at a household level everyday. Heck…I know a few people selling power back who light and power their homes for free and pocket a little check from the power company regularly. Wind power works…but we have to actually use it to its full potential . If you’ve seen a California wind farm sitting motionless because of lawsuits (San Joaquin Valley area) it’d make you sick to your stomach. I suspect its part of the CA power companies attempts to keep prices up. Drives me nuts everytime I see it.

        Even an optimist knows that prices for fuel are rising faster than the wage scale is…inevitably, whether peak oil is fact or fiction…the value of gasoline will reach a point where it costs more to use it than is sustainable economically. The best way to defray that is to make the alternatives ready and able to take up slack and force the average value of petroleum into a level position.

        Adam Smith…personally…I love the guy. Really. “Inquiry Into the Cause of the Wealth of Nations” is great stuff…but it helps if one remembers the context of the times. If you preface your work with a firm belief in a just Creator that will punish evil-doers and expect the better nature of men of faith to guide them into taking principled actions instead of just grabbing loot and running for the hills…then it all works. But this ain’t 1776, baby. The big pigs don’t believe in anything but today’s cash take. Tomorrow isn’t their problem…and they know God is a great thing to talk about…but no real danger to them no matter what they do.

        • Hadrian999 | Sep 5, 2010 at 11:09 pm |

          i think the biggest problem is looking for THE solution, I doubt we will find one source to replace oil the way things are now, but using multiple energy sources and making investments into sustainable building/energy efficiency and less reliance on everyone driving their own automobile everywhere we wont be knocked back into the 1800’s

    • Vox Penii | Sep 4, 2010 at 6:28 pm |

      “Oil is tied to everything. From our clothes and furniture, our computers and televisions, even down to our waste products and their removal.”

      150 years ago, whaling was tied to everything, from our clothes and furniture, to the technology of the day and widespread use of whale oil as energy. Yet when whaling declined as an industry, the world didn’t collapse. American Democracy didn’t dissolve. Capitalism didn’t collapse. What happened was that people adapted.

      • Your Dad | Sep 4, 2010 at 8:49 pm |

        You forgot to include your favourite political cliché. Surely the decline of whaling was a pseudo-Marxist plot?

      • You forgot one thing in that equation…which is an improvement over the usual number of gaps.

        Oil from whaling ceased to be a valuable asset as petroleum products became cheap and accessible…it was replaced while it was still abundant…it simply became less valuable and less desirable.

        In this we have a substance that has not yet been cheaply replaced, which is essential to our lifestyle. We’ve already seen what happens when its price spikes…innovation didn’t take hold and mystically solve anything…we just paid more per barrel or per gallon, ate the loss and let it sap our disposable income which further harmed the economy.

        Your scenario would be great…if we actually follow through and and get sustainable power sources online and running in plenty of time to let oil transition out as a less needed resource…just like whale oil did. Which is what I’m telling people to get on board with…

        …because in 1890…whale oil becoming unavailable or less desirable than a cheap substitute (petroleum) didn’t change jackshit. But they also didn’t depend on nationwide electric power grids and information driven economy or a million SUVs powered by whale oil…as we do with petroleum. Without the precious juice…it won’t all grind to a halt…it’ll just be rationed out carefully to those who can afford it first…at prices the rest of us won’t be able to live with. The alternative…is getting ready first…not sitting on our hands and pretending it’ll all be OK.

  2. Theanarkest | Sep 4, 2010 at 1:15 pm |

    Peak Oil is a LIE methane gas condenses in the well and turns into oil, but its best to leave that shit down there, HEMP!

    • If that happens–and I’ve looked for evidence to support your claim but haven’t found any–I seriously doubt it happens at the ever increasing rate we’re pumping oil out of the ground. Remember that the deposits we have/had took the lifetime of the Earth to form.

  3. Vox Penii | Sep 4, 2010 at 6:26 pm |










    Moreover, did the end of whaling, a major industry in the 1700 and 1800s, bring about the end of Democracy and a collapse of the free markets when whale oil resources dried up? Nope. People adapted. Similarly, if oil does dry up, people will adapt.

  4. lol, whatever germany. in 30 years our technology is going to be fucking insane. way to be short sighted and afraid!

  5. prowling o'cat | Sep 4, 2010 at 6:55 pm |

    Wow, the good seems to outweigh the bad in this scenario. Bring it on!

  6. “Peak Oil” is fake. It was invented by Shell Oil in the 1950’s because they were trying to get their nuclear power division off the ground.

    The reason why we should be moving to alternative energy (besides the fact that I’m tired of breathing the crappy poisoned air) is that global climate change is real, and already having profound consequences throughout the world with way out of control floods, massive droughts, and ass-kicking storms wreaking havoc, but also simply because I’m tired of giving gobs of money to a region of religious nutbags who flip out and blow some shit up at the drop of a cartoon. To hell with the entire region. Anybody stupid enough to live there deserves to suck on camel farts for the rest of existence while the rest of the human race moves into the 21st Century and beyond.

  7. Hadrian999 | Sep 4, 2010 at 11:22 pm |

    what makes you think the German military complex is any more honest or trustworthy
    than the American military complex?

  8. Bamboozelbub | Sep 5, 2010 at 7:54 am |

    For equally effective methods of Predicting the Future try Coffee Grinds, Pigeon Entrails, Palm Reading or my particular favourite: Picking Random Words out of a Hat. I’m looking forward to seeing which one of you is right so when the bombs fly, the ecosystem collapses and we’re all run via remote control I’ll know who to send some flowers and a Thank You note.

Comments are closed.