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Friday, October 07, 2005

The Peak Oil Crisis: The First Casualty

Tom Whipple
Falls Church News Press
3 October 2005

When the historians come to write the history of the 21st Century, they may well record that the African nation of Zimbabwe was the first to succumb to peak oil.

For students of African economies, the current Zimbabwean meltdown comes as no surprise. During the last decade, Zimbabwe 's dysfunctional government got itself involved in war that drained the treasury and then implemented a land redistribution program that drove out the white farmers. These actions devastated exports and led to runaway inflation. The Mugabe government finally got into so much trouble with the International Monetary Fund for failure to make meaningful reforms and repayments, that it is constantly on the verge of being thrown out of the IMF and in turn, can no longer avail itself of the Fund's services When the price of oil started climbing into the $65+ range, official oil imports simply stopped.

The country currently does not have the foreign exchange to purchase oil and it seems nobody is willing to extend credit on acceptable terms. Rigged elections and expropriated land have left the country at odds with the usual foreign aid donors so that only humanitarian food shipments are currently arriving in the country. A few years ago, the government turned much of the oil import business over to the private sector while retaining price caps on retail gasoline.

Obviously, when the cost of oil got higher than the permissible sales price, gas stations went dry.

This has resulted in a black market where gasoline is selling for ten times the controlled price. While Zimbabwe 's multiple economic problems make it an atypical case, it is the first country to run almost completely out of oil. This, in turn, gives us a look at what will happen as the consequences of expensive and scarce oil spreads around the globe. By last week, nearly all buses and commuter taxis in the capitol, Harare , had stopped running, forcing tens of thousands to walk to work. While there are still a lot of private cars on the road, they are being fueled with $36 a gallon black market gasoline. Municipal services have stopped. There are no trash collections, no ambulances, or operating public works vehicles. Only one fire truck has any fuel left. The police immediately commandeer any fuel they come across. Clean water and electricity are available sporadically. Hospitals are out of supplies and the staff is fleeing. What was once one of the cleanest, most modern cities in Africa is nearly finished.

The long-term effects on the Zimbabwean economy are equally dire. The only sugar refinery is shut due to a lack of coal caused by a lack of fuel for the coal-transporting railroad. Production of tobacco, a major export crop, is already down to 30 percent of pre-land reform levels. It now appears that only about five percent of the normal crop will be planted this year. Large numbers of Zimbabweans are fleeing the county in the midst of what is clearly an economic death spiral. Famine, mass movements of peoples, and political turmoil cannot be far behind.

In the case of Zimbabwe , all this human misery is not completely attributable to peak oil and unaffordable gasoline; an abysmally incompetent government is playing a major part in the country's economic demise well in advance of better governed nations. It is, however, representative of what we will see again and again as oil depletion sets in. In the US , we are discussing whether tax cuts are the proper remedy for expensive gasoline.

In Africa , people are starting to starve. Somewhere in the future, peak oil will evolve a test of mankind's humanity to our less fortunate fellows. Will some sort of oil depletion protocol come to pass allowing at least of modicum of oil to support every country's essential services? Or will peak oil be marked by survival of the richest?

This will soon be seen as the heart of the peak oil moral dilemma.

7 comments:

Jason DuMars said...

I am a new reader and really appreciate your writing and insight. I'm a fellow doomer and regularly troll the forums at po.com. My wife and I are almost set for a completely hydrocarbon-free life. I just hope we make it through to next summer when we can be free.

Keep up the good work!

Bubba said...

Very interesting post. One of the more unique Peak Oil posts I have read in a while.

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