“Civilizations die from suicide, not by murder”
The late historian Toynbee argued, that when civilizations meet a challenge they cannot overcome or resolve, they rather commit suicide than to let themselves murdered by outside forces. I sincerely doubt however that anyone from the political class in the West read Toynbee, let alone be influenced by his thoughts… Yet, here we are at this historical juncture clearly marking the end of centuries long Western dominance, colonization and exploitation — and together with a looming fall in global oil production: the slow decline of industrial civilization. What do we do next? Are we strong enough to step back and stop this madness?
Systems, which took centuries to build up and evolve to their current form are not willing to give up on their dominance easily. What we are witnessing today is but a beginning to a long political, economical and technological struggle lasting (probably many) decades into the future. The economic superorganism encircling the planet is doing everything to keep itself alive for a little longer while being starved of energy. It would first crack in two large chunks, then after the crumbling an fall of its more depleted half, the other would follow suit.
With the above process in mind, let’s first make a quick sweep through the economic news in Europe, where the idea of Western dominance born and where it seems to meet its fate. So, how things look like on the onset of Europe’s long descent? On the face of it, the continent it seems has now filled up its gas storage units to the brim and LNG tankers are now queuing up in front of European ports waiting to be unloaded. For the untrained eye these news, together with a considerable fall in TTF gas prices, might even convey a reassuring message: ‘All will be fine this winter, all we have to do now is to focus on the next cold season.’
This, of course, could not be further from the truth. Despite the happy talk the unfolding crisis — the cannibalization of Europe’s industries — did not stop on its tracks for a minute. The western media were very complacent in how alternative sources have taken over the role of Russia in gas supplies — although they did so without addressing the question of quantities. Yes, there is (somewhat) more gas coming from places like Azerbaijan, Norway, or the US, but the amount of stuff is nowhere close to what used to come through pipelines from Siberia.
A critical thinker might ask at this point: how could we fill up our storage in Europe then? The official answer is that people and the industry were saving on energy by not turning on the heat in this mild autumn weather. As someone who has spent years in manufacturing (involving high energy intensity products) this statement instantly smelled like bullshit. Looking behind the happy talk, and by digging deep into the pits of the energy and economics news departments, the answer quickly revealed itself:
The drop is not just because industrial companies are turning down thermostats, they are also shutting down plants that may never reopen.
In other words: de-industrialization is already well on its way. The article then goes on to explain:
Energy-intensive industries, such as aluminium, fertilisers, and chemicals are at risk of companies permanently shifting production to locations where cheap energy abounds, such as the United States. […] The International Energy Agency estimates European industrial gas demand fell by 25% in the third quarter from a year earlier. Analysts say widespread shutdowns had to be behind the drop because efficiency gains alone would not produce such savings.
Adding weight to these words the author quotes Chris Heron at industry association Eurometaux:
“Historically, when these temporary closures happen, permanent closures come as a consequence”
Now, that half of its zinc and aluminum smelters are off, together with 70% of its fertilizer production, it is absolutely no exaggeration to say, that Europe May See Forced De-Industrialization As Result Of Energy Crisis:
That the European Union is heading for a recession is now quite clear to anyone watching the indicators. The latest there — eurozone manufacturing activity — fell to the lowest since May 2020.
The October reading for S&P Global’s PMI also signaled a looming recession, falling on the month and being the fourth monthly reading below 50 — an indication of an economic contraction.
In perhaps worse news, however, German conglomerate BASF said last month it would permanently downside in its home country and expand in China.
Not quite what Europe’s wise leadership class expected at the beginning of April, for sure. In response, companies — those who have the technical means at least — are now switching to burn heating oil and diesel; further exacerbating the unfolding diesel crisis. (Which is primarily caused not by the lack of refining capacity or strikes, but the slow decline in the right type of petroleum to make this fuel from, which sanctions on Russian oil further exacerbate… More on this topic at a later time though.)
Thinking about the sanity of European politicians, this switch to diesel — together with its unfolding supply crisis — made me wonder though, how wise is it then to turn off Russian oil imports from December and refined products from February (including the very fuel we need more of to replace natural gas). ‘No problem, we will invest in renewables then!’
Western efforts to secure supplies not just for energy but also for key minerals used in electric vehicles and renewable infrastructure are also at risk from high energy prices. It should not come as a surprise then, as a result, A Quarter Of Europe’s Solar And Battery Manufacturing Capacity Is At Risk.
As I explained many times on this blog, while sunshine and wind might be abundant (at least in the spring and the summer), the materials needed to build panels, electric motors, batteries and turbines require fossil fuels in every step of their lifecycle. These products are just as dependent on oil as the gas-guzzler SUVs they aim to replace. They do lower the overall CO2 emissions, but since they cannot be produced without burning fossil fuels, these ‘green solutions’ are only an extension to the coal, oil and gas infrastructure, not a replacement.
Thus, it should not come as a surprise then that the sudden reduction in natural gas imports (a fallout from the unfolding economic war), and the resulting price volatility threw a great deal of doubt on Europe’s ‘green’ power plan:
As energy prices have increased all costs, including of the materials needed for renewable infrastructure, investment models built on low prices for renewably-produced electricity are in doubt.
This self-imposed crisis has made it abundantly clear how dependent wind and solar are on cheap fossil fuels — not only in technical terms, but also from an investment perspective. Remember, when (and not if) the rest of the world too starts to feel the pain caused by the coming slow decline in fossil fuel availability this will become our shared reality — across all continents.
So, was it by accident or due to a mere policy error that Europe has got the first blow of de-industrialization? I would argue: neither. This happens not only because it was Europe who has used up its fossil fuels first in a rush of industrialization and two world wars, but because its leaders were ‘persuaded’ to go first where others would follow. Let me explain.
After the first two world wars have brought an end to colonization and left much of the continent devastated, Europe in general and Germany in particular has become a de facto occupied territory for the remainder of the 20th century. The current conflict with Russia stems in a great part from the fact, that after the Eastern Block has collapsed between 1989–1991 the Western half — well, how to say — remained loyal to its liberator, and kept expanding eastward ultimately openly encouraging Ukraine to join their ranks in 2014.
Was it Europe’s independent decision then to give up its military, while allowing the alliance it is part of to expand eastwards? Some would argue of course, but to use an astronomical analogy, it is by no accident that Jupiter, the largest of all planets has no close neighbors: it has crushed every planet in its wake leaving a wasteland of a meteorite belt between itself and the rest of the inner planets. Now, it is followed only by its closest satellites.
According to the brilliant historical parallel laid out by Michael Hudson, Europe had to ‘kiss the imperial ring’ and were left with no other choice than to join the ‘holy crusade’ against the rising powers of Eurasia. At first it had to give up its military, then its political and now, with the sanctions war (hallmarked by the explosion of Nord Stream 1 and 2), its industrial strength and independence.
It certainly looks like that the ghost of Hastings Lionel Ismay, the first Secretary General to NATO is still haunting us today. He once famously quipped that the purpose of NATO is “to keep the Soviet Union out, the Americans in, and the Germans down” — a saying that has since become a common way to describe the dynamics of NATO.
For proof, that this idea is not a mere brainchild of a derailed economics professor and a long dead general, look no further than the US’s very own think tank of foreign policy, RAND Corporation, admitting that there is indeed no European strategic autonomy to speak of:
“The strategic autonomy of Europe is intimately tied up with the actions and intentions of the U.S., its internal politics, as well as its foreign, defence and security policy and power projection abroad.”
I don’t know about you, Dear Reader, but I prefer to be intimately tied up with my wife rather than a nuclear superpower hell bent on projecting its power around the globe.
Europe, though, is not the only one finding itself in this situation. Seen in this light it is absolutely no wonder that as the US slowly turns its attention towards China, Canada Orders Chinese Companies To Divest From Its Critical Minerals Sector. (You know, it is better to be prepared should the next bout of power projection ‘reluctantly’ hit the world’s biggest producer of critical metals over the Pacific…)
It is not hard to see how the unfolding de-globalization and a rapidly developing rift between former trading partners is completely driven by political ideologies aimed at maintaining the economic and military dominance of the West, and one country in particular.
What does this has to do with energy production? Well, the break-up of trading relations is already disrupting supply chains and could increase costs of solar and wind by an additional 20–25% by 2030. This comes in addition to any other cost rises due to increasing fossil fuel scarcity and the ever higher energetic cost of mining and refining metals needed for the ‘transition’ — making its success even more questionable.
In this purely economic sense the policies followed by the West will not only lead to the loss of power in many parts of Europe, but soon in the United States as well. Remember, a rapid decline in oil and gas production is approaching fast, endangering any attempt made at switching to ‘renewables’ — as explained through the case of Europe above. As a US oil executive put it:
“Shale will likely tip over in five years, and U.S. production will be down 20 to 30 percent quickly. When it does — this feels like watching the steam roller scene in Austin Powers. Oil prices in the late 2020s will be something to behold”
Who would be left helping out the US then? The Saudis? Venezuela? Iran? ‘Come on, there’s got to be someone! Ideas, anyone…?’
The West has made a grave mistake. Instead of building lasting, mutual relationships, and negotiating a peaceful end to this one-time-only fossil fuel bonanza — participating in a slow and manageable de-growth of the global economy — its leadership class has bullied allies into obedience and forced them to give up their businesses. Meanwhile they are now openly threatening everyone else failing to comply with sanctions, asset confiscations, military encroachment and regime change. How wise a strategy this is in an age of resource limits, only time can tell. I would not bet the farm on its success though.
Until next time,
B
Image credit: Pixabay
