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Writing from one of the hottest real estate markets in America, where we are now hearing a giant popping sound, some are asking questions, most aren't.
Now that our leaders have planted UC Merced as the anchor tenant for Growth, what's next? We've got an university among us under daily more intense scrutiny from the Legislature for misfeasance, malfeasance and nonfeasance with respect to the public purse -- a university with one shining "victory," its retention of shared control of Los Alamos National Laboratory for the research and development of weapons of mass destruction. We have local developers, in cahoots with local politicians, breaking every public process, land-use and environmental law to build unsightly, resource-gobbling, air-polluting subdivisions. We've got landowners who may still farm but are no longer farmers. The sheer quantity of money flowing around town is mind-boggling, but it means wealth for very few along with the destruction of old business districts in favor of new strip malls.
None of this development had anything to do with creating job places. UC Merced and what followed were nothing but a land deal. Merced may have been transformed into the last, dumbest bedroom community in California by a public university maddened by an edifice complex, and by a gaggle of enabling Valley politicians, developers, landowners and financial institutions.
Our leaders and those with access to them, throughout this process, shared common obsessions: greed and hatred of environmental law, regulation and our environment itself, which they saw as standing in their way. At this point, it is fair to speculate that greed and hatred blinded them.
The problem of what to do with blind leaders is unimportant compared to what to do to survive them and their colleagues.
THE PARADIGM IS THE ENEMY: The State of the Peak Oil Movement at the Cusp of Collapse
A Speech by Michael C. Ruppert for the Local Solutions to the Energy Dilemma Conference
April 27-29, New York City, at Cooper Union
[This is the most important speech of my life. If you read anything I've written this year, read this - MCR]
April 28, 2006 1630 PST - (FTW) - NEW YORK -
As a matter of necessity, in the course of a turbulent and often very difficult life, I have developed a pretty warped sense of humor. As most police officers,
nurses, ER doctors, paramedics, and military combat veterans know, the
best time to find humor is when things are at their worst. Sometimes the
humor that emerges from these situations is strange, to say the least.
And yet sometimes it remains the most memorable humor of a
lifetime-humor that can actually sustain you in tough times. Humor is
Too often Peak Oil activism reminds me of a statement that I found a
long time ago in a book of famous quotations. In the section containing
the last recorded words of famous people I found a quote that has stayed
with me ever since.
The quote was simply, "We've got them now."
The person who wrote those last "recorded" words on a dispatch to his
commanding officer, General George Crook, was George Armstrong Custer.
During the course of this conference I have heard precious little
attention paid to events in the world around us indicating that Peak Oil
is about to have its global "coming out party" and what that might mean.
In almost every nook, cranny and corner of the planet, stress points are
beginning to fracture. For the past five years I have argued,
emphasized, and repeated endlessly that perhaps the biggest mistake of
all time was made on September 11th 2001, when the only real global
operational plan to deal with Peak Oil was put into effect. On September
11th we began a war, now infamously known as "the war which will not end
in our lifetimes," to decide who will control the last remaining oil and
gas reserves on the planet.
In Crossing the Rubicon I wrote, "Events in the five-year period that
began on September 11th, 2001 will determine the course of human history
for several centuries to come." We are just months away from the end of
that five-year period. What has been accomplished?
The painful answer is: not enough.
Where are we in the real world and how do we judge our current
activities in light of real-world events? To sum it up in the words of
one of the most senior members of the Peak Oil movement I know, Jay
Hanson, "I see my worst fears unfolding right in front of my face." Jay
wrote those words just about a week ago.
Jay started the first Peak Oil website in the 1980s, almost even before
there was a web. We should listen to Jay, and I could not agree more
with his assessment; my worst fears are unfolding right in front of my
Perhaps the greatest flaw in the Peak Oil movement's current operating
paradigm is that, a part of the movement at least, instead of building
lifeboats in the face of an immediate disaster, is delusionally focused
on trying to build alternative-powered luxury liners that operate just
like the paradigm we as a species need to be abandoning. Not only is
this a futile effort, it may well be responsible for killing or
destroying the lives of people who at least partially understand Peak
Oil and who are trying to find the best courses of immediate action for
themselves and their families.
Some parts of this movement however-and tonight I intend to honor two
men who are leading the way-have seen the writing on the wall and are
independently taking appropriate courses of action that demonstrate both
the kind of incisive thinking and leadership that will be needed in very
Before I tell you about these men I think it's a good idea to stop for a
minute and take an inventory of the world in which we live today-right
THE STATE OF THE WORLD'S ENERGY
I have observed that almost every Peak Oil conference, whether this one,
or the Association for the Study of Peak Oil, or ASPO-USA, makes only
the most superficial attempt to evaluate geopolitical and economic
conditions. These conditions, more than the rate at which supplies are
depleted, will determine how Peak Oil and collapse manifest in our
The Times of London on April 8th ran a story that should have
pre-empted every other major story that day. Headlined "World 'cannot
meet oil demand'". The story's first sentence read, "The world lacks the
means to produce enough oil to meet rising projections for demand for
fuel, according to Cristophe de Margerie, head of exploration for
Total." Later the story quoted Margerie as saying, "'Numbers like 120
million barrels per day will never be reached, never' he said."
In the last year we have seen the collapse of Kuwait 's
super-giant field Burgan; accelerated decline in the world's
second-largest field, Mexico 's Cantarell; and an overall global decline
rate approaching 8%. We have seen Saudi Arabia fail to increase
production while at the same time finding it more difficult to hide
deteriorating reservoir conditions in all of its mature fields,
including Ghawar. As of tonight, more than 30 of the world's largest
producing nations have entered steep decline.
Discoveries continue to fall off a cliff. Over the last four
years the world has been consuming 6 barrels of oil for every new one
found. Publicity stunts, such as the recent attempt to reclassify
Venezuelan tar as oil - even when applauded by dilettantes like Gregg
Palast - are having no impact on markets, prices or public policy. I
think we can safely say at this point that we will soon see an end to
the influence of charlatans and schemers like Daniel Yergin of Cambridge
Energy. (Now there's at least one bright note.) At this point, the Peak
Oil movement should avoid expending needless energy on any arguments
about whether Peak Oil is real or not. That precious energy is needed
elsewhere. We have won that debate.
Soaring commodity prices for everything from copper, to uranium,
to cement and steel are not only hampering needed infrastructure
investment, they are also making it almost impossible to build new
drilling rigs, especially deep water rigs. Commodity scarcities are the
result of overpopulation, hoarding, over consumption and nothing else.
Drilling rigs themselves are in extremely short supply around the world
and I believe we should also stay away from any debates about whether
new oil supply will even make a difference. It will not and we need only
continue to breathe in and out to see this position vindicated also.
The US government continues an unwinnable war in Iraq while
building massive permanent bases and the largest embassy compound ever
built. Not only does the US have no intention of leaving Iraq , it has
committed-whether under Republican or Democratic leadership-to staying
forever-whatever that means. The Empire's position is clear, not as a
result of what it says, but as a result of what it has done. America 's
primary plan to deal with Peak Oil is to fight or intimidate for energy
supplies wherever it deems necessary. That, of course, has forced the
rest of the world-with a few notable exceptions like Norway and Brazil
-to dance to the same sheet music. As a result, I would estimate that of
every ten units of energy (or money) expended preparing for Peak Oil
today, nine are spent preparing for war while only one is spent building
lifeboats and teaching people how to survive. This is sheer insanity.
The US government is playing a bluff hand over an attack against
Iran , which in spite of being both unlikely and risking a global
nuclear holocaust, has resulted in massive increases in military
spending all around the planet. A global arms race is now using up
energy and commodities that should be used rebuilding railroads,
enhancing mass transportation, and building renewable infrastructure to
soften the coming blows.
In the face of this, the entire world, and especially China ,
Russia , India , Germany and Japan are pouring hundreds of billions of
dollars of investment into Iran . This is one of many sure signs that
the American Empire's weaknesses are becoming visible. There is blood in
the water and blood in the water usually leads to a fight. The world, at
least as far as its pocketbook is concerned, is betting on Iran .
Russia is selling Iran lots of Tor M1 anti-aircraft missile
systems and cruise missile and high-speed torpedo technologies. China
also is flooding Iran with advanced military systems.
The US has stepped up deliveries of weapons systems and military
advisors to oil-producing regions around the world. This has been
matched by similar deliveries to the same regions by Russia , China ,
Pakistan , Saudi Arabia , Venezuela , France , Britain , India and many
other countries. A best-selling novel in China , The Battle in
Protecting Key Oil Routes, has the Chinese navy destroying a US carrier
battle group. The popular book documents a bloody contest over control
of the Straits of Malacca, that narrow channel through which most of
China 's, Japan 's, and Korea 's energy passes.
China 's Hu Jintao, clearly one of the world's only major
leaders with both plans and choices, is making direct calls on Saudi
Arabia and Nigeria as George W. Bush haplessly points to hydrogen fuel
cell cars as a solution. Don't worry about how many American people will
buy into such Bush nonsense. Worry about how many world leaders are
watching these same clips and asking, "Is that the best he can do?
America is in deep shit."
In Nigeria-the US's fifth largest oil supplier and the world's
eighth-groups of well-organized and supplied rebels are using high-tech
email, bombs, bullets and kidnapping to terrorize major oil companies.
Production is threatened on a daily basis. In a world where there is no
place else to go to replace even 50,000 barrels a day-out of the 84
million needed-the totally corrupt regime of Olusegun Obasanjo is
besieged by rebel and dissident groups on many fronts. I have no doubt
that several of these groups are being financed, trained, led and
supplied through covert arms of the US, Chinese, Russian, British,
Saudi, Pakistani and/or Indian governments.
In nearby Chad-which is the source-country for the Chad-Cameroon
pipeline delivering 160,000 barrels a day into the global mouth-as he
attempts to ward off an aggressively hungry World Bank, President Idriss
Deby is literally holding oil hostage. Knowing full well that to shut
down the pipeline would cause an estimated $10 jump in the price of oil,
he is literally telling the west, "Come any closer and I'll shoot the
At the same time, Chad is beset by rebel insurgents from
neighboring Sudan , which is China 's fifth-largest oil supplier. Both
the US and China are hip-deep in covert operations in Sudan.
On April 18, Secretary of State Condoleezza Rice met with one of
Africa's most brutal dictators, Teodoro Nguema of Equatorial Guinea
-Africa's third-largest oil exporter, calling him a good friend of the
US . With institutional memories as short as they are, few remember that
Sir Mark Thatcher, son of Britain 's Margaret Thatcher, was nabbed last
year in the middle of a coup intended to oust Nguema.
All of Africa, especially West Africa-exactly as I predicted in
in Crossing the Rubicon and
in last year's lecture series which became our newest DVD Denial Stops
exploding with armed insurrections from the Western Sahara region to
Angola . It is West Africa where I believe we will see proxy wars likely
intensifying this year, which could trigger a global nuclear exchange in
very short order.
But murder, far more callous, is about to be perpetrated by the
Democratic Party as it enters the 2006 midterm campaigns with what is
surely-barring a miracle-going to be one of its major planks in 2008:
"Don't worry," they will promise, "the Democrats will restore cheap
gasoline for all and find a no-pain answer to all of our energy woes.
High prices are the fault of greedy oil companies and price gougers, not
a lack of supply." I can promise you now, Hillary Clinton, that if the
Democratic Party adopts this approach it will find in me an enemy that
will make FTW's editorial posture towards the Bush administration over
the last five years look like abject friendship.
American mainstream media has become absolutely and certifiably
schizophrenic on the issue of Peak Oil. Within the space of an hour, one
can watch segments acknowledging Peak Oil and Gas and the insoluble
problems they bring, and segments assuring us that there is no problem
at all if we just fix a few little things.
On April 11th The Financial Times reported that Russian
production is falling and expected to decrease-rather than
increase-rapidly over the next four years.
On April 21, Russia 's giant, Gazprom-for the second time in less
than a year-threatened to shut off Europe's only major source of natural
gas. Just a month previously, a desperate and hobbled Britain
surrendered its energy sovereignty to the European Union in the hopes of
getting better energy prices at the end of Russia 's long natural gas
On April 24th, just a few days ago, during his state visit to
Saudi Arabia , Chinese President Hu Jintao signed a series of accords in
which China , in exchange for a larger portion of Saudi oil exports,
agreed to transfer high-tech weapons and other technologies to the Saudi
monarchy in exchange.
At the same moment that George W. Bush has announced that he will
stop refilling the US Strategic Petroleum Reserve in an ill-conceived
attempt to lower pump prices-a completely shortsighted and self-serving
gesture-China is in negotiations with Saudi Arabia to begin filling a
Climate Change and hurricanes not only continue apace but have
accelerated. Now that we are just weeks away from a new hurricane
season, fully 23% of Gulf of Mexico production remains shut-in after
last year's hurricanes. Recently the Department of Energy acknowledged
that most of that would never be rebuilt due to high investment costs at
mature and post-mature reservoirs. Aside from the fact that it's not
cost effective, this is also because of rig shortages. This is what FTW
warned you about almost a year ago. When and if we ever have a chance to
look back we will historically mark Katrina and Rita as the singular
moment in time when a true US economic and military resurgence became
impossible; the moment when the Empire began it's collapse. In other
words, that was the moment when the Empire passed from decline to
On April 4th, Dow Jones' MarketWatch reported that $6 to $7
gasoline might be coming this summer. Is there anyone in this room
tonight who does not believe that $6-$7 gasoline would be an
unmistakable sign of collapse?
And let me add an observation here. I think a good part of this
unseasonable spike in American oil prices is both caused by the switch
out from MTBE to ethanol and a classic political strategy which is to
create a bad problem and then appear to solve it so that people will
accept an otherwise unacceptable solution. This is an election year. The
elections are not for seven months. I for one do NOT think we will see
$6 or $7 gasoline this summer. I think gas prices may reach $4 or even
$5 for a short period, after which the Bush administration (say sometime
between July and September) will again tap the Strategic Petroleum
Reserve and his oil industry base will-they hope-be able to find a few
million barrels to temporarily drive prices down, give Republicans a
desperately-needed electoral boost, and feed another dose of valium to
the increasingly worn out American consumer.
But to assume that the current high prices are solely caused by
the MTBE/Ethanol switchover is to miss the fact that Britain is now
experiencing it's highest-ever gasoline prices averaging more than $8
per gallon or that Japan-according to the news agency Chugoku-has now
reached it's highest-ever price for diesel fuel at almost $4.00 per
gallon. These countries do not have MTBE rules to be concerned with.
Peak Oil is here.
There is an enormous risk lurking in all this. I mean a potentially
As the effects of Peak Oil intensify there is less and less wiggle room
on the planet for any miscalculation. Worse, there is less and less room
to recover from or adjust to any "surprises" that might come along.
What are some of these possible surprises?
Just one more major hurricane
A major earthquake in any oil producing region or pipeline
corridor from Russia 's far east, to Iran , to Alberta
Any one of a dozen possible side effects from global warming,
whether from melting tundra that might sink pipelines, to rising sea
levels that might endanger offshore production
Civil unrest in any oil-producing region that gets out of control
and damages more infrastructure than can be quickly repaired
A decision by Venezuela 's Hugo Chavez to redirect just 10 or 15%
of his US exports to other customers
A successful attack on Saudi Arabia 's Abqaiq terminal
Political unrest in our second-largest oil supplier, Mexico
Major unrest in the Caspian basin - another region where covert
operations are now probably the second- or third-largest GDP component
for several nations.
As I speak tonight, India is moving to supply MiG 29s to Tajikistan at
the same time that Kyrgyzstan is threatening to revoke permission for US
bases. This is a building vacuum that China , India , Russia and
Pakistan (all nuclear powers) are eager to fill. Add Iran to the list of
nations seeking increased influence in the Caspian Basin.
Another one of many reasons why the US cannot and will not attack Iran
is that-unreported by the major media-the US military has undertaken
quiet but significant military build ups in both West Africa and in the
Caspian. US military personnel have been dispatched to Nigeria and NATO
and the US Navy have begun moving into to the Gulf of Guinea. This is
pulling ever tighter on the already over-stretched rubber band holding
the US military together as it experiences a continuing, unmitigated and
unprecedented defeat in Iraq .
There are many more possible precipitating events that could push the
first dominoes in the chain of collapse. Any one of them could trigger a
massive and sudden descent into chaos that would catch all of us by
surprise. My position is that we cannot afford to be unprepared for
surprises. And it's probably an event we haven't thought of that will
ultimately do it. These are only a few possibilities.
THE STATE OF THE AMERICAN AND WORLD ECONOMIES
General Motors, as it stands on the brink of bankruptcy, has
announced that it lost $106 billion last year.
Ford and Daimler Chrysler are teetering not far behind GM as
Toyota is poised to become the largest auto maker in the world, bigger
in terms of sales than America 's Big Three combined.
As US News told us last December 19th, 800,000 jobs were going to
be cut last winter. The final numbers aren't in yet, but it looks like
According to an MS-NBC story dated April 24, "The Housing Bubble
Has Popped" as inventories swell, sales decline, prices soften, lenders
are raising rates and the first signs of panic start to appear. For
those who have followed the housing bubble closely, you know that this
is a global housing bubble and that these trends have become apparent
from the UK, to Australia, to Japan. Along with falling house prices and
a drying up of credit, over-stretched consumers now face very difficult
choices as they are forced to decide between driving, eating, paying
their bills, or having a place to live. This particular collapse is just
beginning and the world economy must follow its lead.
New stories are reporting that some Americans are pawning
precious objects for gas money.
Consumer debt continues to skyrocket as the US trade deficit
continues to explode.
Bankruptcies are at an all-time high.
As Reuters told us on April 22, the Finance Ministers of the G7
nations have just announced after their recent meeting in Washington
that the dollar is going into decline.
On April 24th, Qatar announced that it will begin diversifying
out of dollars and into Euros.
On April 4th, according to Reuters, the Vice Chair of the Chinese
parliament urged that China reduce its holdings of US debt.
On February 22, the director of Norway 's stock exchange
recommended that Norway drop out of the London Petroleum Exchange
(priced in dollars) and open an oil trading bourse priced in Euros.
On January 12, Britain 's Independent announced that Norway had
begun preparations for a global environmental and economic collapse. The
story reported that " Norway has revealed a plan to build a 'doomsday
vault' hewn out of an Arctic mountain to store two million crop seeds in
the event of a global disaster. The store is designed to hold all the
seeds representing the world's crops and is being built to safeguard
future food supplies in the event of widespread environmental collapse.
In a sign of pending inflation, the Federal Reserve last month
stopped telling us what the M3 money supply was in a surefire indication
that inflation is on the way. This came conveniently after further
inflationary indicators were hidden by removing the cost of gasoline and
food from the Consumer Price Index.
On March 28, Al Jazeera warned that Asia must be prepared for an
imminent dollar collapse.
On March 26, India moved to relax all currency controls for the
Rupee. This suggests that India knows a dollar crash is coming and hopes
that the Rupee will enjoy the bounce.
China has made another adjustment re-evaluating the Yuan,
accelerating the dollar's decline.
The Asian Development Bank has announced plans to develop a
regional currency index as a preliminary step in the creation of a
Euro-like currency for Asia.
The dollar has lost six cents against the Euro in the last six
Gold, which I have and still devotedly endorse as a safe haven
for either rich or poor, has broken through to highs not seen in 18
years. I had not expected gold to break $600 an ounce until at least
this fall. It happened weeks ago. Notwithstanding the predictable price
corrections that we will see, as a failed and broken system of gold
price suppression loses control, I think the path is now fairly clear to
$800 gold within two years or less. When Peak Oil becomes aggressive,
within the next five years, I think $1,000 gold is a certainty. As
always, I encourage FTW subscribers and anyone who will pay attention to
continue to invest in gold. To be precise, I encourage them to invest in
physical, tangible, gold bullion or bullion coins like the Maple Leaf or
Krugerand that can be kept close to home and hearth. Small gold
purchases can be made for as little as a few hundred dollars. All of the
struggling FTW subscribers who have made even tiny purchases have
benefited by seeing even their meager investments double in four years
and increase by 50% in value in just the last 18 months.
Morgan Stanley's Stephen Roach - who last year warned of an
economic Armageddon is now warning, "I continue to believe that the
American consumer is the weak link in the global daisy chain. The
combination of rising long-term interest rates and higher oil prices
puts an unmistakable squeeze on discretionary income - the last thing
overly indebted, savings-short US consumers need."
So why then has the Dow recently reached six-year highs? It's simple,
and I know that my good friend and colleague, Catherine Austin Fitts
will agree, that the DOW Jones Industrial Average has absolutely nothing
to do with measuring the quality of American life. I am reminded of one
of the most important quotes I have ever obtained for a story, that of
Dutch economist Martin Van Mourik who told the Paris ASPO Conference in
2003, "It may not be profitable to slow decline."
Indeed ladies and gentlemen, we have reached the point where every
increase in the Dow will mean that life has actually gotten worse for
Americans and riskier for the world as a whole. I described the endgame
of this irony in one of my favorite essays of all time Globalcorp
M. King Hubbert wrote, and as Catherine Austin Fitts teaches, and as I
have said for so long, "Until you change the way money works, you change
It is a shame that much of the Peak Oil movement that understands this
problem is foolishly trying to change the way money works systemically,
instead of trying to change it in the only way that time and
circumstance now permit-individually, locally and regionally. The first
and primary requirement for that to occur is for people to disengage
from the global paradigm ...