Guest Post: Future Chaos: There Is No "Plan B"

Tyler Durden's picture

Submitted by Chris Martenson

Future Chaos: There Is No "Plan B"

Note: This article builds on my recent report Prediction: Things Will Unravel Faster Than You Think.  It explores the coming energy crunch in more detail by looking at existing government planning and awareness, and the implications of what international recognition of peak oil as early as 2012 might mean.

The hard news is that there is no "Plan B": the future is likely to be more chaotic than you probably think.  This was the primary conclusion I came to after attending the most recent Association for the Study of Peal Oil & Gas (ASPO) in Washington DC in October, 2010.

The impact of peak oil on markets, lifestyles, and even national solvency deserves our very highest attention - but, it turns out, some important players seem to be paying no attention at all.

ASPO conferences tend to start early, end late, and be packed with more data and information than should be consumed in one sitting.  Despite all this, I was riveted to my seat.  This year's usual constellation of excellent region-by-region analyses confirmed what past participants already knew: peak conventional oil arrived a few years ago and new fields, enhanced recovery techniques, and unconventional oil plays are barely going to keep up with demand over the next few years. 

But there were two reports that really stood out for me.  The first was given by Rear Admiral Lawrence Rice who presented the findings of the 2010 Joint Operating Environment (a forward-looking document examining the trends, contexts, and implications for future joint force commanders in the US military) which spends 76 pages summarizing the key trends and threats of the world.  "Energy" occupies six of those pages and peak oil dominates the discussion.  Among the conclusions (on pg 29) we find this hidden gem which uses numbers and timing that are eerily similar to those I put forth in my April 2009 report Oil - The Coming Supply Crunch:

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.


While there are two "coulds" in that statement, the mere possibility that such an imminent arrival and massive shortfall could be true should give every prudent adult a few second thoughts about what the future may hold. If surplus production capacity disappears in just a couple of years, there's an entire world of planning that should really take place beforehand at the international, national, community and personal levels. 

More on the JOE report in a minute.  Next I want to turn to a presentation given by Rick Munroe who did his best to discover where in the civilian governmental departments lie the plans for what to do in a liquid fuel-starved future. 

To cut to the chase, it turns out that virtually every department he contacted in both the US and Canada denied having any such reports.  In one humorous exchange by email Natural Resources Canada  stated two things in the same email:

  • “At this time the Department has no views on [peak oil].
  • "There is no imminent peak oil challenge…."

It will be interesting to see how NRCan words their emails once they do develop a point of view. 

The main conclusion from Rick's presentation was that peak pil is being examined closely and taken seriously by military analysts but not civilian authorities.  What few plans that do exist on the civilian side are decades old.

The implications of this are that North America "remains highly vulnerable to a liquid fuel emergency disruption" and, since because there are only a few dusty plans lying around, there will be greater chaos than necessary.

Now back to the JOE report. 

OPEC: To meet climbing global requirements, OPEC will have to increase its output from 30 MBD to at least 50 MBD. Significantly, no OPEC nation, except perhaps Saudi Arabia, is investing sufficient sums in new technologies and recovery methods to achieve such growth. Some, like Venezuela and Russia, are actually exhausting their fields to cash in on the bonanza created by rapidly rising oil prices. (pg 26)

A severe energy crunch is inevitable without a massive expansion of production and refining capacity.  While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. (pg 28)


Well, the amounts needed from OPEC are quite, shall we say, 'ambitious' as they amount to an additional two Saudia Arabias coming on line in order to make up the shortfall.  A massive crunch is not otherwise avoidable.  Let's be honest, there are no more Saudia Arabias to be found.  Perhaps we could cobble one together out of thousands of smaller, less productive fields, but the likelihood of a few massive fields 1,100 feet under the ground waiting to be found is extremely remote.  People in the business of actually producing oil know that producing from smaller wells takes more time, equipment and manpower. 

Meanwhile, I also happen to agree with their assessment that the details of the effects are difficult to predict but that the general theme will be one of reduced growth, and that's under the best of circumstances.  More likely we'll have to figure out how to operate on zero or even negative growth.

So I came away from the ASPO conference pondering two completely polar trends that combined to create a lasting discomfort.  On the one hand we have more and more private and military organizations coming to the conclusion that peak oil is imminent and will change everything, possibly disruptively.  On the other hand there appear to be no plans within the civilian government to deal with a liquid fuels emergency.

While we can expect that such plans will be tossed together when necessary, I would hope that Katrina taught us a few lessons about developing plans on the fly after the disaster has already arrived.  Sure, things got done, but they were certainly suboptimal and led to more confusion and more chaos than if they'd been carefully developed, practiced, and debugged.

The way that I understand the lack of planning on the part of the civilian side is that peak oil does not present any easy political wins, if any at all.  Given the 2-year planning cycle in DC, it's never a good time to bring up such an unpleasant subject.  Politics trumps necessity. 

What can be rather easily predicted here is that when the next fuel crisis arrives there will be more chaos than necessary.  Some areas will get completely stiffed on their fuel allotments while other areas will be reasonably well supplied.  The reason that this can be easily predicted is because it more or less already happened in Europe during a protest by French fishermen inspired by high fuel prices.  They blockaded ports in late May of 2008 and by early June the action had spread across Europe.  Shelves were quickly stripped bare of essential goods, tensions mounted, and petrol stations ran dry in a hurry.   

And these were just the effects of a port blockade and tanker truck strike.  What would happen with a real and persistent shortage of fuel?  Well, if it were perceived to be due to a structural and permanent inability of the global oil market to meet demand, prices would rise stratospherically until demand was cut off.  The only problem is, letting prices determine which industries idle back may not be the best plan. 

Consider the case of agriculture.  If full 'pass through pricing' is the mechanism of rationing, which it currently is, then less food will be grown.  With world grain stocks at historic lows this is one area where we might not want to let Mr. Market dictate the activities of farmers based on fuel price.  To do otherwise would require a plan of some sort and none appear to be in effect.

That's the source of my discomfort.  It's not necessarily that large organizations are beginning to share my sense of timing and impact of peak oil, although that will hasten the tipping point of awareness - it's that somehow I always thought that because Admiral Hyman Rickover knew well that this day would come (in the 1950's!) that 60 years would have been sufficient lead-time to assemble some credible plans.

No plans = unnecessary chaos.

The lack of planning also betrays a very common attitude which might be summarized as “we’ll deal with that when we get there.”  I detect this attitude in a wide range of individuals and market participants so it’s not at all uncommon.  However, I think it’s a mistake to hold this view.  When (not if, but when) full awareness of peak oil arrives on the international stock, bond and commodity markets we’ll discover just how narrow the doorways really are.  Only a few will manage to preserve their wealth by squeezing through the doorway early, most will not make it through. As mentioned frequently on this site, our What Should I Do? guide for developing personal resiliency against a post-peak future offers a valuable resource for those just getting started in their preparations.

This thinking is explored in greater depth in Part 2 of this report (enrollment required) in which I discuss strategies to fill the official vacuum by developing our own plans for what we should do in response.

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Goldenballs's picture

Plan B does exist and is a top secret project run by NASA  the end result is a manned landing on Mars.

Mongo's picture

Well that solves the problem!... or at least redefines "diversifying risk".

SheepDog-One's picture

You mean Operation Goldmember?

Sudden Debt's picture

Just google HAARP. There is a plan B, C, D, E, F against the global currency mess.

You just need to be willing to open your eyes.

I am a Man I am Forty's picture

Thank god for haarp, keeps those pesky hurricanes in the atlantic and away from the coast....yep.

chopper read's picture

HAARP is the subject of numerous conspiracy theories, with individuals ascribing various hidden motives and capabilities to the project. Journalist Sharon Weinberger called HAARP "the Moby Dick of conspiracy theories" and said the popularity of conspiracy theories often overshadows the benefits HAARP may provide to the scientific community.[15][16] Skeptic computer scientist David Naiditch called HAARP "a magnet for conspiracy theorists", saying the project has been blamed for triggering catastrophes such as floods, droughts, hurricanes, thunderstorms, and devastating earthquakes in Pakistan and the Philippines aimed to "shake up" terrorists. Naiditch says HAARP has been blamed for diverse events including major power outages, the downing of TWA Flight 800, Gulf War syndrome, and chronic fatigue syndrome. Conspiracy theorists have also suggested links between HAARP and the work of Nikola Tesla (particularly potential combinations of HAARP energy with Tesla's work on pneumatic small-scale earthquake generation) and physicist Bernard Eastlund. According to Naiditch, HAARP is an attractive target for conspiracy theorists because "its purpose seems deeply mysterious to the scientifically uninformed".[17]

Conspiracy theorists have blamed HAARP for numerous earthquakes. An opinion piece on a Venezuelan state-run television channel's website named HAARP as a cause of the 2010 Haiti earthquake. [18][19][20]

Mariposa de Oro's picture

LOL.  I get a kick at the FEMA camp/Bush/Marital law meme of these stories.  Now, don't get me wrong.  I'm convinced the gov is preparing a police state in the USA.  However, Bush has been gone for almost two years.  The articles about Bush/FEMA Camps/Martial law haven't been updated to include the current regime's progress in the police state creation.  My three favorites are the airport x-rays, x-ray vans, and Czar John Holdren's plan in incorporate UAVs into the national airspace.  Why he wants drones patrolling the skies over America, I can only imagine, but judging by usage in the ME, and HSA's focus on 'right-wing extremists and domestic terrorists, I'd say its not to help out the 'little guy'.

scratch_and_sniff's picture

There are lots of tiny little plan B's, they all add up and we live happily ever after.

Mongo's picture

Still waiting for peak stupidity...

bada boom's picture

Or the parabolic rally.

SheepDog-One's picture

Sept 1st to today isnt enough of a lunatic parabolic rally for ya?

Lux Fiat's picture

Yep.  I like potentially promising small caps, and trade in that arena frequently.  The number of near vertical lift-offs of late is amazing.  In the past, that has usually been a pretty good warning sign.  However, if BB keeps ramping liquidity, hard to say how long it could go on.  Then of course, there is always the laggard or two that keeps tap dancing right above the stop level.

kridkrid's picture

I'll introduce you to my mother-in-law at your request.

Steak's picture

algae bitchez!

There's no doubt that algae-based fuel is tantalizing -- unlike crops, trees, the sun and wind, algae starts out already half-comprised of hydrocarbons useable for bio-diesel, as Debora MacKenzie writes at New Scientist. That's why Silicon Valley, the Pentagon and serious oil companies are attempting to crack the code and scale up algae into a global transportation fuel. And if you ask the chin- and chest-out Venter, his own efforts are headed for tickertape-parade-type success: "Designing and building synthetic cells will be the basis of a new industrial revolution," he told Pollack. "The goal is to replace the entire petrochemical industry." 

<this article is pretty evenhanded in adressing algae, there is promise and limitations, but it is undoubtedly a plan B> 

spartan117's picture

Seaweed, bitchez.  It's abundant, naturally occuring, and full of vitamins and nutrients.  Except for the ones floating in and around the GOM, of course.

kurt_cagle's picture

But the seaweed in the GOM is full of oil already!

downrodeo's picture

Exactly. There are alternatives. We just have to be creative enough to discover or utilize the solutions to their full potential. I think he was right about the wake up call. Although, maybe if farmers were charging more for their crops based on higher fuel prices, it would create an incentive for us to explore other ways of fueling agriculture.



morkov's picture

meanwhile stock-up on bicycles ...

Sneeve's picture

Yeah, algae sounds great, but it ain't gonna happen on this planet in a useful timeframe. Someone who knows (Robert Rapier) writes about it here:

and elsewhere on his blog


the rookie cynic's picture

Alternatives are pie-in-the-sky pipe dreams at this point. The EIA suggest we'll need 739 quadrillion BTUs/year by 2035. That's a hell of a lot of "alternatives." So much for Plan B.

Needless to say, I'm not holding my breath on that one.

From my blog a few days back:

"Not only are these critical raw material getting scarce, it’s also takes more and more energy to get them.

Nature, the ultimate lender of last resort has a balance sheet problem: depletion.

Eventually we will have a zero sum game; it will cost more to get the stuff out of the ground than it’s worth.

The powers-that-be are in denial; on a finite planet, exponential growth is an oxymoron.

Contrary to what they preach in Washington and Wall Street, our current economic system destroys the basic resources it depends on to survive.  We’re committing environmental, and by extension, economic suicide."

wake the roach's picture

Contrary to what they preach in Washington and Wall Street, our current economic system destroys the basic resources it depends on to survive.  We’re committing environmental, and by extension, economic suicide."


Absolutely... We have created the perfect economic system (profit/competition) for the unsustainable extraction and conversion of low entropy natural resources into high entropy waste...

The universal laws of thermodynamics can not be trumped... The only solution is the global abandonment of the profit system of energy (money) allocation and thus, an end to infinite growth (consumption/waste)... I do not underestimate the scale of such a systemic change (ideologically), but it is one that we are now being forced to make... Exponential or not, any growth via consumption of finite resources is unsustainable, meaning, profit 2.0 is collective suicide... The jig is up, time to pay the bill...

But I'm absolutely certain that if global civilization does survive and prosper into the next century and beyond, this moment in time, when we made the brave and wise collective decision to accept global resource equality, will be celebrated as the birth of civilization type one... 


Hulk's picture

Just what Kalifornia needs, more potheads...

chopper read's picture

repealing the prohibition?  ...what a rapid change in 'ethics'.  ha, ha.   

SheepDog-One's picture

The future is a lot more chaotic than the Zerohedge permabull boner chart posters think. I myself know what chaos is coming, loaded up with guns beans and bullets for months now.

Mercury's picture

Plus, you may be able to fart your way to hydro-carbon independence...

SheepDog-One's picture

Hey it worked for Bartertown! Not shit, FUEL! Who run Bartertown? MasterBlaster! *toot*

Sunshine n Lollipops's picture

KAOS agents to Benny:

K: 200 billion dollars by 3pm.
Benny: 200 billion dollars by 3pm?
K: You seem a bit slow, is there someone else I can talk to?

BobPaulson's picture

Peak oil is already hitting us. It won't land like a tonne of bricks IMO, it will look like a tonne of bricks in retrospect, but the pain it creates will be attributed to other economic issues. If there is more gas and coal for the medium term, it just makes driving more expensive, which will be good. Not sure how the effect on prices will be felt in a backdrop of rapid currency devaluation...

doolittlegeorge's picture

think the Saudi's are out?  Dubai collapsed less than one year ago.  Seem longer than that, doesn't it?

BobPaulson's picture

The 2nd and 3rd majors Cantrell and Burgan (sp?) are both past peak. They must pretend Ghewar is not peak to reduce panic - of course even past peak it continues to produce. After that our good friends in Iran, Iraq, Venezuela and Russia have good sized conventional reserves. I think the fact that prices have been so stable is evidence of how weak the U.S. economy is.

101 years and counting's picture

Is peak oil really a threat as the global depression takes it grip and demand drops 20-30% from current levels?

you folks can talk about peak oil....i'll talk about peak demand (already hit).


Mako's picture

I agree.

We're always at oil peak. 

Hulk's picture

Don't forget that demand in Asia is increasing...

espirit's picture

Looking forward to the continuation of your series. During the past rash of hurricanes impacting the east coast of Florida, it was interesting to know that employees / contractors of fuel oil importers of port servicable areas were not able to obtain available gasoline or diesel to fuel their trucks. So... I am inclined to believe there are contingency plans in place, but perhaps not available to the average joe.

Dig deep into the Homeland Security Plans and you will find what you seek. 

TradingJoe's picture

Everyones Plan B is different, based on their personal situation. I think food, shelter and security are the main ingredients! Rest can be accomplished as we go!

Mako's picture

"The hard news is that there is no "Plan B": the future is likely to be more chaotic than you probably think."

I always word it like this... there is no backup financial system.  There is no backup generator to be turned on. 

Gully Foyle's picture


Of course there is a plan B, and C and Z.

Every possible action effecting the US/World/TPTB has already been modeled.

Every conceivable scenario has been planned for with acceptable amount of loss due to death and destruction.

What the fuck do "Think Tanks" due?


ATM's picture

Plan B is to own a donkey and expect to never travel beyond 20 miles from home unless you have some wealth. Maybe the Amish were right afterall?

Sunshine n Lollipops's picture

I'm pretty sure I won't like donkey meat.

duo's picture

peak stupidity = ethanol

irreplaceable oil, water, and farmland used to create subsidies for agribusiness and kickbacks for a few senators.

wake the roach's picture


Although I believe biofuels do have a select role in our future energy mix, its very limited by scale... No way on gods green earth ;-) can we produce the BOE (barrels of oil equivalent) energy from biomass to save this economic model/lifestyle... And really, who wants to??? From what I can gather, the more "wealth" we accumulate, the higher the SSRI dose one needs to believe the lie... We need to re-examine what makes for a happy and productive life and in a big way...

I have posted this link before but I feel its quite an eye opener and a glimpse into our future... Note who funded one of the studies ;-)...

system failure's picture

WTH is going on? Why is the market not green green green!!! Are (BEN) they losing control is the last acts of desparation?

cnbcsucks's picture

Not to worry.  Just the usual "get the token selling out of the way" in the first 10 minutes and then we rocket higher on abysmal economic news and a crashing dollar.