The Perfect Storm

I have conversations with people all the time about disaster preparations. I believe being prepared for a society-buster scenario is as important as life insurance, which is pretty important to most people. I see it as "life assurance". Most of the stuff I purchase to prepare is usable in any case, food, guns, fuel... it's just a matter of keeping a stockpile on hand.

I like to talk about peoples concerns, perhaps to allay my own concerns, but also to bring it to their attention that the world is not as well off as they think. Here is how I see things going, and how we end up in the perfect storm.

Government Spending

I think our political system is broken. The republic has failed. Democracy has failed. The leechers and looters have taken over, they are feeding, and they've reached critical mass. This is not the result of any scientific study, I can see it just by their attitudes. We are currently paying 10% of our taxes to foreign nations in interest. We could start paying this debt off, but that will never happen because of the political campaigns. The word "re-election" pretty much sums up all of the problems. If politicians weren't concerned about re-election, we wouldn't have the problems we have. As it is, they will continue to spend in order to get re-elected. The more they spend, the weaker our nation becomes. We will eventually hit an inflationary singularity. The government will never go bankrupt, and the inflationary singularity will happen long before. What will happen is the world, perhaps overnight, will decide they don't want to operate in dollars, they don't want to invest money into a country where we ramp up inflation and make their investments worthless. I think it could happen in the next few years, and it's most likely to be triggered by one of the other "perfect storm" factors...

Nuclear War in the Middle East

Past presidents have tried to fix the middle east, but we can see that their problems are deep rooted. I could show you any number of videos of Mickey Mouse look-a-likes teaching Palestinian children to cheer on others "Jew killin". The Israelis obviously won't put up with those hell-bent on their destruction, there will eventually be a war. Pakistan has nuclear weapons and could collapse any day and become a terrorist state. Iran already is a terrorist state and is working on nuclear weapons. Syria has built reactors (all now destroyed) which were secret enrichment facilities. North Korea has provided plans and materials for the construction of the Syrian plans and could likely sell a functional nuclear bomb for billions of dollars. Other middle east countries have announced their desire to build nuclear reactors. It seems like conventional warfare breaks out every few years and Israel always wins. It's only a matter of time before one of these rogue states creates or purchases a nuclear bomb and detonates it in Jerusalem. This would blow the doors wide open and the world would be in a nuclear free-for-all, and even if the free-for-all lasts 1 day, that's long enough to break world oil production...

Peak Oil

I believe we've already seen oil supply shocks. The supply is obviously limited, how limited is anyone's guess, but an even bigger problem is consumption. Right now India and China have over 8 times as many people as the United States, but combined they use less than half of the oil we consume. Their consumption has been growing exponentially, and you could predict that they would at least double their consumption in the next few years. This would require tremendous increases in oil production, but production has not been increasing at all lately, and likely won't keep up with demand as these countries move into the 21st century. The consequences of skyrocketing oil prices will be a decline in the US economic output. Our country is entirely dependent on foreign oil. The shock of it is likely to cause enough panic and mayhem itself, the strategic oil reserves are intended to help with the shock, but I think they need to be much much bigger for it to work.

When the US economy is in decline, and our "leaders" are trimming costs, the military is the first place they'll go. When the world police have their budget cut, the world will change. See #2 (Nuclear War in the Middle East).

Food Shortages

I'm not a believer in the "population bomb" theories, that the world population will eventually eat us out of natural resources. I think the population of the planet could reach hundreds of billions before we'd start to feel crowded, as long as we can responsibly deal with resource shortage. The problem is we can't. Our farming infrastructure depends heavily on oil production. If the oil stops, the food stops, and I don't think the world has the reserves to recover from a single year of famine or drought. I can think of many things that could cause a shock to the food supply; anything that shocks the oil supply, nuclear war, volcanic eruption, plague. We're particularly vulnerable with our energy supply.

The Effects

This is where one can really begin to speculate. I am not sure what the effects would be. Some people predict violence, I think it's entirely possible and depends on the scenario. What I will say is that our food supply is too dependent on the fuel supply chain. Our entire economy has been "pipelined" so extensively, globalization has created a dependence on trans-oceanic transportation for most of the goods we consume, including the fuel itself. Most of the electricity we produce in this country comes from coal and natural gas. The natural gas plants may continue to operate but coal mining depends on oil. This complex web of dependence on oil is the true killer. Disrupt the supply of oil, people will starve. It will be up to the government to ensure that food production continues, the rest of the economy will come to a screeching halt if the government does this. People will stop working and will only wait in line for a food handout.

The Solution

I believe renewable energy is the only thing that will save us. Lucky for us, renewable energy is making a good comeback. The 2003-2006 energy prices really spurred investment in green technologies, it was good timing for new thin-film solar manufacturers, who say they can produce solar panels for less than $1/watt, which is widely regarded as a price barrier. When oil was expensive, solar panels cost over $4/watt, today they can be had for about $2.50/watt, this is for regular silicon panels. Right now solar production is growing fast, currently at 17 GW (gigawatts) annually, it is expected to reach 42 GW in 2013. Of the world's 16 terawatts of total energy consumption annually, about 6 terawatts is required from oil. If 100% of the solar manufacturing capability was going to replace fossil oil consumption, we would break even within maybe 15 or 20 years. This will also require engines that operate on electricity instead of oil.

This may seem like a simple transition, but I can point out a few weaknesses. The solar production is likely to start hitting resource limits, and may see 10 or 20 years of delays from this timeline. For example, the Indium used in the thin film cells is also used in LCD displays, and the silicon used in silicon cells is the same used in semiconductors, and has always been in high demand. The growth may be overestimated due to the recent greentech investment bubble. Another problem is the slow rate at which new technology is adopted. Many industries, like farming, simply won't adopt these technologies because they're too new. It may take up to 30 years for the technology to really mature and reach the point where a transition would take place. So, if we were to come up with a conservative estimate of 30 years for renewable energy to reach market saturation, any price shock leading up to that would cause a scenario similar to what I've described.