How different nations might cope with oil shortages after Peak Oil

Notes from 9 page: Jörg Friedrichs. 2010. Global energy crunch: how different parts of the world would react to a peak oil scenario. Energy Policy 38 (8): 4562-4569.

Oil is a finite resource, so given the importance of oil, the precautionary principle mandates to take warnings of peak oil seriously and assess possible consequences.

While a global peak of oil production would by definition be a planetary event, reactions would differ in different parts of the world. Since globalization has been fuelled by cheap and abundant energy, traded as a commodity on a free market, increasing conflict over scarce energy would undermine the very foundations of the world-wide social, economic, and political normalization processes that have been observed over the past few centuries.

I focus on oil importing countries, which constitute the vast majority of states. Because an event comparable to peak oil has never happened at the global level, I study cases where oil supply disruptions in the order of 20% have occurred at the national level.

1) Japanese PREDATORY MILITARISM before and during the Pacific War. The specter of future resource shortages had played an important role in shaping Japan’s imperialist strategy ever since the end of World War I. When an American oil embargo became imminent, in 1941, Japan pre-emptively attacked the US Naval Base at Pearl Harbor and radicalized its war of conquest in order to gain access to the rich oil supplies of the East Indies. My second

2) TOTALITARIAN RETRENCHMENT in North Korea after the end of the Cold War. When subsidized deliveries of oil and other vital resources from the Soviet Union were disrupted, the ‘‘Hermit Kingdom’’ reacted in a shockingly reckless way. Elite privileges were preserved in the face of hundreds of thousands of North Koreans dying from hunger. While this may be morally repugnant, it clearly represents another possible reaction to a peak oil scenario.

3) Socioeconomic adaptation in Cuba. Cuba lost their subsidized deliveries from the Soviet Union. While this plunged Cuba into a deep crisis, there was no mass starvation comparable to North Korea. Instead, Cubans relied on social networks and non-industrial modes of production to cope with energy scarcity and the concomitant shortage of food. They were actively encouraged to do so by the regime in Havana.

We can easily imagine additional trajectories, such as the mobilization of national sentiment by populist regimes.

After the American War of Secession, the South of the United States was deprived of slaves as the backbone resource of its socioeconomic way of life. One would expect this to be the easiest case for a smooth energy transition. After the Civil War, Southerners only had to look to the North of their own country for investment and innovative technologies. Nevertheless, the modernization of ‘‘Dixieland’’ took at least a century. Since a similar ‘‘upgrade’’ does not seem to be available in the event of peak oil, one should not be overly optimistic about a smooth transition to a post-oil (or post-carbon) society.

Predatory militarism: Japan, 1918–1945.

In September 1945, Japan was so fuel-starved that it was difficult to find an ambulance with sufficient fuel to transport Premier Tojo to a hospital after his attempted suicide. Pine roots had been dug out from mountainsides all over the country in a desperate attempt to find a resinous substitute to fossil fuel. Much of the Japanese air force and navy had been sacrificed in kamikaze raids, at least in part because there was not sufficient petrol to refuel planes and ships to return from their sorties and keep fighting (Yergin, 1991: 362–367).

The main lesson the Japanese military had taken home from World War I was that a country cut off from raw materials was bound to lose in a military contest. In their view, Germany had lost because it did not muster the necessary industrial base or access to foreign markets to achieve wartime autarky. To be prepared for a total war, resource-poor Japan would therefore have to control access to strategic resources. Only a self-sufficient economic bloc in East Asia would sufficiently prop up Japanese industrial capacity to secure the desired status of a great power (Barnhart, 1987: 9–21; Beasley, 1987). It was precisely to prevent fuel starvation and dependency on other strategic resources that Japan embarked on aggressive military campaigns. After a liberal interlude in the 1920s, the next decade saw the invasion of Manchuria (1931) followed by the invasion of China (1937). The paramount goal was to achieve self-sufficiency in an economic bloc that was later, in 1940, to be proclaimed as the ‘‘Greater East Asia Co-prosperity Sphere’’.

Instead of becoming more self-sufficient, Japan grew even more dependent on the importation of critical commodities – especially from the United States. The situation was particularly dire for petroleum, which was completely indispensable as a military transportation fuel. Since the US was the dominant producer of petroleum at the time, Japan was heavily dependent on American oil deliveries. Japan imported 90% of its oil, of which 75–80% was shipped from California. For the critically important gasoline, the dependence was even higher (Miller, 2007: 156–157).

The only alternative to importing oil from the US was looting it from Borneo and Sumatra in the East Indies.

Totalitarian retrenchment: North Korea, 1990s.

While Japan in the 1930s and early 1940s went on conquest to assert its status as a great power and secure foreign supplies, the totalitarian regime of North Korea in the 1990s retrenched in order to preserve elite privileges after the demise of the Soviet Union. Between 1995 and 1998, a terrible famine led to the starvation of an estimated 600,000 to 1 million people, or 3–5% of the population (Goodkind and West, 2001: 234). This was in glaring contradiction to the country’s self-proclaimed national ideology of self-reliance (juche). In line with that ideology, up until the 1980s the regime had heavily invested in coalmines and hydropower to satisfy North Korea’s enormous energy needs.

Furthermore, Pyongyang had developed a toxic industrialized agriculture to feed the highly urbanized North Korean population. Farming in North Korea was based on irrigation, mechanization, electrification, and the prodigious use of chemicals. In 1990, estimated per capita energy use was twice as large in North Korea as in China and over half that of Japan (Williams et al., 2002: 112). All of this came to naught with the demise of the Soviet Union, when it turned out that oil was the Achilles heel of the North Korean economy. Since North Korea does not possess any proven reserves of petroleum, oil was mostly imported from the Soviet Union in exchange for political allegiance. In 1991, Russia stopped subsidized exports of oil and other inputs to North Korea. Two years later, Russian exports to North Korea were down by 90% ( Haggard and Noland, 2007: 27–32). This had dramatic effects. While the North Korean regime reserved most remaining fuel for the military, the rest agricultural production. Already in 1991, Pyongyang launched a ‘‘Let’s Eat Two Meals a Day’’ campaign.

After a series of decent harvests due to favorable weather conditions in the early 1990s, severe floods and droughts led to the North Korean Great Famine between 1995 and 1998 (Haggard and Noland, 2007: 73–76).

The Great Famine of Korea from 1995 to 1998 is a paradigm example of how the lack of a key resource such as oil can have momentous repercussions. Most obviously, North Korean land machines depended on oil. Without fuel, tractors and other machines were not running.

The next problem was transportation. Fuel was needed to bring fertilizer and other inputs to farms, and agricultural products to urban consumers. Fuel was also needed to ship coal from mines to fertilizer plants, where coal was converted into soil nutrients.4

Fuel was further needed to get coal to power stations for electricity generation. Thus, electricity was yet another problem. Without sufficient electricity, irrigation pumping and electrical railways became intermittent. This further affected transportation. Without reliable trains, it became even more difficult to bring coal to fertilizer plants or power stations, to transport fertilizer to farms, and to get agricultural products to urban consumers (Williams et al., 2002).

Thus, interlocking energy shortages combined with food shortages and a general decline of infrastructure to produce an almost hopeless situation.

The consequences were worst in agriculture where there was plummeting food production, considerable loss of arable land, and a rapid depletion of soil fertility. Restoring soil fertility would have required large amounts of lime, which however could not be transported without fuel. In a desperate attempt to replace land machines, draft oxen slowly became more numerous. But, unlike tractors, work animals compete with humans for food. The energy crisis also compelled many poor people to rely on biomass for cooking and heating. Unlike fossil fuel, however, the extraction of biomass reduces soil fertility, which in turn aggravated the agricultural crisis.

As a result of such interlocking vicious circles, the production of rice and maize fell by almost 50% between 1991 and 1998.

North Korea has even become a nuclear power, which sometimes enables Pyongyang to extort international concessions. While such brinkmanship may be morally repugnant, Korean-style totalitarian retrenchment is without doubt one possible response to a severe energy supply disruption.

Socioeconomic adaptation: Cuba, 1990s.

Cuba faced an energy supply disruption in the 1990s similar to the one experienced by North Korea. If anything, the Cuban supply shock was more severe, with the CIA estimating the decline of fuel imports between 1989 and 1993 at a whopping 71% (quoted in Dıaz Briquets and Perez Lopez, 2000: 250). Subsidized energy supplies from the Soviet Bloc ceased to 100%.

In 1990, Fidel Castro was forced to proclaim a national emergency called the ‘‘Special Period’’. The crisis devastated the entire Cuban economy. Machines lay idle in the absence of fuel and spare parts. Public and private transportation was in shambles. Workers had difficulties getting to their jobs. Factories and households all over the island were struck by unpredictable electrical power outages (Pe´rez-Lo´pez, 1995: 138–140). As in North Korea, the most painful effects were felt in the food sector. The nutritional intake of the average Cuban – especially protein and fat – fell considerably below the level of basic human needs (Alvarez, 2004: 154–169). Consumers resorted to chopped-up grapefruit peel as a surrogate for beef, and some people started breeding chicken in their flats or raising livestock on their balconies (Pe´rez-Lo´pez, 1995: 138). Nevertheless, people in Cuba were not dying from malnutrition and starvation; homeless people and gangs of street children, turned into scavengers, were not characteristic features of Cuban townscapes. Nor were violence, crime, desperation, and hopelessness characteristic features of Cuban neighbourhood life (Taylor, 2009). This is in remarkable contrast to North Korea.

To some extent, Cubans were helped in their efforts to cope with the crisis by a benign climate, revenue from tourism, remittances, foreign investment, and international aid. Also, the regime in Havana was more humane than its counterpart in Pyongyang. After some initial tinkering, it undertook cautious reforms. The country was opened for tourism, parts of the informal sector were legalized, and various forms of local self-help were encouraged (Pe´rez-Lo´pez, 1995). However the real miracle was done by the Cuban people. Against all odds, ordinary people managed to get along due to the remarkable cohesion of Cuban society at the community level. Although Cuba is highly urbanized, the typical barrio is an urban village.

Households are tightly embedded in neighborhood life. Most families have lived in the same home for generations. The typical Cuban household is shared by an extended family. Cuba’s multi-generational family households include aunts, uncles, and cousins. People cultivate close relationships with friends and relatives inside and outside the barrio (Taylor, 2009).

This local solidarity, or social capital, helped them to make ends meet during the ‘‘Special Period’’. As one inhabitant of a vulnerable neighborhood put it, the crisis brought people closer together because it forced them to rely on one another (quoted in Taylor, 2009: 140).

Traditional knowledge was also decisive in feeding the population. Although most land had been collectivized after the revolution of 1959, about 4% of Cuban farmers had kept their plots. Another 11% was organized in private cooperatives (Burchardt, 2000). The survival of traditional family farms alongside industrial agriculture turned out to be an important asset. Independent farms were more resilient to the crisis than state farms because they operated with less fuel and agrochemical inputs. Cuba’s remaining family farmers kept important traditional knowledge that could now be recovered. Other formerly independent farmers had moved to state farms or urban areas, where they provided valuable know-how for self-provisioning and urban agriculture. Urban agriculture was a local self-help movement, facilitated by the availability of traditional knowledge in combination with organic technologies and the Cuban-specific rustic ingenuity. Idle stretches of land between concrete blocks or in urban peripheries were turned into organic gardens. Vacant or abandoned plots in close vicinity to people’s homes were transformed into garden sites. People occupied these urban wastelands to grow vegetables and other foodstuffs. By the mid-1990s, there were hundreds of registered horticultural clubs in Havana alone.

The United States and China

Given their military capabilities, the United States and China would be the most obvious candidates for a ‘‘Japanese’’ strategy of predatory militarism. The US may be tempted to use its unrivaled power projection capacity to secure privileged access to oil. It has happened sometimes in the past, and may happen more often in the future, that US decision makers find military coercion more effective than trade. China is no match for the US, but it would be capable of using its military muscle to secure access to oil and gas in Central Asia.

The United States combines extreme dependency on foreign oil deliveries with an unrivaled capability to project military power.

When the oil market comes under pressure because of tightening supply, the US will continue to defend it for a while. But when soaring prices start crippling the national economy, US leaders may find that coercive diplomacy is more effective than free-trade rhetoric. The US is then likely to put the blame on foreigners and pursue a geopolitical strategy of ”energy security” to protect the American way of life (Klare, 2008). Why keep negotiating with recalcitrant leaders such as Chavez if there is a military option? This is not to say that the military option is easy, as the Iraq war has shown. However, military coercion is likely to gain ascendancy relative to free-market rhetoric as oil supplies become scarcer. The resource-rich neighbors of the US, Canada and Mexico, would become tied more closely to the American core.

In South America, mid-sized oil producing countries such as Venezuela and Ecuador might try to profiteer from soaring oil prices. If they engage in a strategy of brinkmanship and deny the US oil on favorable terms, their regimes may be toppled. This would further increase anti-American resentment in the region, but opportunistic elites might ultimately acquiesce to American hardball tactics. In the past, Latin American elites have often opportunistically colluded with the US. Eventually, resource-rich Brazil may be able to escape intervention due to its larger size and geographical distance from the US. If Brazil manages to offer sufficient benefits to neighboring countries, a regional state complex around Brazil may be possible. Otherwise, energy-poor Latin American states may enter a serious crisis. We may then see how much Cuban-style socioeconomic adaptation is possible in other Latin American societies.

The elites of oil producing countries such as Nigeria, Angola and Mozambique would keep selling their oil to the highest bidder, especially if the bid is backed by sufficient military clout and if there are no onerous obligations with regard to democratization and human rights. Unless the US insists on its dysfunctional democratization agenda, it will have better access to African resources than Europe, China, or Japan.


After peak oil, Western Europe would be in a difficult quandary. Although in principle Germany and France could easily arm, a credible military option is not available. Europeans have good historical reasons to dread predatory militarism, and the social consensus necessary for this strategy would not be forthcoming at the decisive initial stages of geopolitical positioning. In most of Western Europe, the path of totalitarian retrenchment does not seem to be available either. Concomitantly, Western European countries would be forced to strike opportunistic ”bargains” with Russia and the oil exporting countries of North Africa. Unfortunately, however, such deals are inherently fragile and subject to constant renegotiation. Investment in renewable energy and innovative technologies might somewhat mitigate the transition, but ultimately Europeans could hardly avoid a transition to a more community-based lifestyle. Despite the present affluence of Western European societies (or precisely because of it), this would be extremely painful

As a result, people would be forced to rely on local communities for their welfare if not their survival. However a regression to community-based values and a subsistence lifestyle would be difficult because the habits of industrial society are deeply rooted. Western Europe’s problems would be compounded by social segregation along immigrant groups and/or religious fault lines which, on the one hand, might enhance communal support for specific groups but, on the other, would conjure up severe conflict in Europe’s multiethnic societies. The situation of JAPAN would be similar to Western Europe. In both cases, the unavoidable transition to community-based values and a subsistence lifestyle would be very painful

Other Nations

A ‘‘North Korean’’ solution of totalitarian retrenchment that ‘‘screws’’ the population to preserve elite privileges is most likely in countries with a strong authoritarian tradition.

In consolidated democracies, totalitarian retrenchment is much harder to imagine.

Nevertheless, the history of 20th Century Europe shows that even democracies can and do sometimes degenerate into tyranny. It is difficult to predict to what point even in consolidated democracies political culture could deteriorate in a protracted and serious crisis.

For example, elites in the second-wave democracies of Latin America may have lesser qualms than their counterparts in Western Europe about ‘‘screwing’’ their own population to preserve elite privileges.

The paths of totalitarian retrenchment and socioeconomic adaptation are more easily available in EASTERN EUROPE and SOUTH EAST ASIA than in Western Europe and Japan.

Particularly but not exclusively in sub-Saharan Africa, state failure and conflict over scarce resources would become endemic. The inevitable end of the oil-based “green revolution” and the demise of international aid would wreak environmental havoc and human insecurity. The ecological situation would be aggravated by the soil being deprived of vital biomass as a combustible.

‘‘Cuban-style’’ socioeconomic adaptation is far more desirable

Many people in developing countries may be able to mitigate the effects of peak oil by reverting to community-based values and a subsistence lifestyle. Such a regression would be comparatively easy for people in societies where individualism, industrialism and mass consumerism have not yet struck deep roots. Socioeconomic adaptation would be more difficult for people in Western countries, where individualism, industrialism and mass consumerism have held sway for such a long time that a smooth regression is hard to imagine. And yet, survival in many presently industrial Western societies may ultimately depend on support from local communities and a subsistence-based lifestyle.

All of this can be formulated as three causal propositions, or ‘‘hypotheses’’.

Hypothesis 1. The greater a country’s military potential and the stronger the perception that force will be more effective than the free market to protect access to vital resources, the more likely there will be a strategy of predatory militarism.

Hypothesis 2. The shorter and the less a country or society has practiced humanism, pluralism and liberal democracy, the more likely its elites will be willing and able to impose a policy of totalitarian retrenchment on their population.

Hypothesis 3. The shorter and the less a country or society has been exposed to individualism, industrialism and mass consumerism, the more likely there will be an adaptive regression to community-based values and a subsistence lifestyle.

In the transition, large private Western companies such as Exxon and Shell would lose further ground to the state-controlled companies of oil exporting countries such as Saudi Arabia’s Aramco or Nigeria’s NNPC.

Hypothesis 4. In the event of peak oil, there will be winners and losers. It seems reasonable to expect a redistribution of power and wealth from oil importers to oil exporters, and from private to state-controlled companies.

It is far from my intentions to exclude the sudden appearance of a deus ex machina, such as the discovery of a new energy source or a revolutionary technological breakthrough. However, time is an issue. Exploration takes time, and the implementation of new technologies takes even more time. What takes most time of all, is the formation of the ”new consciousness” necessary for radical social change. This can be gleaned from yet another case study:

Dixieland. The socioeconomic backbone resource of the Old South was slaves. Precisely because the slave economy worked, white Southerners were willing to defend it in the bloody War of Secession of 1861-1865 (Fogel, 1989; Wright, 2006). The abolition of slavery after the War plunged the South into a deep crisis. The War was followed by the Reconstruction Era (1865- 1877), when the victorious North tried to enlist dissident elites and former slaves to impose its political and socio-economic institutions on a reluctant South. Despite the introduction of representation and suffrage for former slaves, reconstruction was mostly thwarted by the recalcitrance of traditionalist Southern elites. Developing energy technologies is never fast and easy, and even less so in times of crisis.

My conjectures rely on prior knowledge about historical and institutional path dependencies. While the long-term future is fundamentally open, in the short and medium term there are significant path-dependencies that make some trajectories far more likely than others. This applies to particular countries and regions. For example we roughly know which countries have large power projection capabilities, recent authoritarian traditions, and high levels of ”social capital”. We also know which regions possess significant reserves of energy resources, and how these resources have been managed in the past.

As a baseline, I need to make some assumptions about peak oil. I assume that, after a short plateau, oil production will fall by about 2-5% per year. I further assume that no adequate alternate resource and technology will be available to replace oil as the backbone resource of industrial society.


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