It was the end of history, they said. Nothing bad would ever happen again. That sentiment peaked in 2005 with the notion of “Responsibility to Protect” – that the  civilised world would step in to stop the lesser breeds without the law from being mean to each other. 

But those happy times contained the seeds of their own destruction and in 2014 the book “Twilight of Abundance” was published, detailing five developments that were coming in the 2020s: peak oil, Chinese aggression, cooling climate, famine, and nuclear proliferation. President Macron of France caught up and warned last year of the ‘end of abundance’.

It is gratifying that those dire predictions are all happening on schedule. It is common now to see headlines like this:

China is a country run with fathomless depravity by the Chinese Communist Party.  For the last thirty years at least their internal party documents have been saying that they will start a war with the United States with the aim of displacing that country as the major power on the planet. The first public acknowledgement of that was an article by Robert Kaplan in 2005 entitled “How We Would Fight China”. 

The Chicoms say they are going to invade Taiwan. The drumbeat of war in Asia is provided by this chart of Chinese baiting of Japan in the Senkaku Islands:

There has been a doubling of incursions since 2019. War with China is going to be a big affair with a big death toll and lots of suffering. Yet we still trade with China which allows them to finance their war of choice. There is no need to trade with China, they are no longer the cheapest:

Thankfully the manufacturing exodus from China is accelerating. Samsung, for example, now produces US$65 billion per annum of revenue from factories in Vietnam. Apple is moving to Vietnam and is also considering India. The latest insult to foreign companies in China is a directive to have a Party representative as chairman of any committee in a company.

It is especially gratifying that Nature behaved as predicted in Twilight of Abundance with peak global temperature in 2016:

As at February, 2023, the atmosphere is only 0.08°C warmer than the average of the period 1990 to 2020. Nevertheless, this measurable but humanly imperceptible warming has our government still frothing at the mouth about the danger to the planet. And we must suffer as a consequence.

Cooling of the planet will go on for at least another thirty years and see growing conditions shrink towards the equator. It will be the late frosts hitting places like the Corn Belt that will be particularly disruptive to agriculture.

With respect to famine, the US Government is putting off that day by sending grain to places that have bred their populations well beyond their carrying capacity. So the US is paying for Ukrainian grain to be milled in Turkey and then trucked via Pakistan into Afghanistan.  South Africa barely feeds itself and the collapse of the power sector there due to corruption may see the US try to stave off starvation in South Africa as well.

China also has a big risk of famine, even as they threaten most of their neighbours. Mao’s population explosion in the 1960s turned China into a nation of involuntary vegetarians as there was little grain available for stockfeed. The economic prosperity of the last 20 years has allowed meat to return to the Chinese diet but that is all from imported soybeans and corn:

The column on the left is Chinese sources of plant protein in tonnes. The column on the right is sources of plant protein as a percentage of total protein intake. Imported protein contributes 41% of total plant protein consumption. And this is a country planning to start a big war? Yes they are but they are autistic and see the world as they want to see it.

With respect to nuclear proliferation, the world would now be better off with more rather than less. The worst countries in the world – Pakistan, North Korea and likely Iran – have nuclear weapons. China is now expanding its nuclear arsenal at a great rate in order to acquire a nuclear warfighting capability as opposed to just having enough as a credible deterrent.

Most of the OECD countries rely upon the nuclear umbrella provided by the US. But that shield might be down. There are a couple of pointers to that. In 2014 the Obama regime made Japan return 300 kg of weapons grade plutonium they had been lent in the 1960s. That would have been enough for 50 warheads of 40 kt yield each, assuming tritium boosting. China is now confident enough that they have threatened to nuke one Japanese city per day until the Japanese unconditionally surrender. It is as if the Chicoms know the US nuclear shield is no longer operative.

Obama still runs the White House. As recounted in this article, Susan Rice, in the eight year of the Obama regime, used to ceaselessly mock Joe Biden for being stupid. Yet Biden, as President, was forced to accept her in his cabinet as Obama’s operative. Obama wants to destroy Western Civilisation and stabbing Japan in the back will go a long way towards that.

South Korea now wants to acquire nuclear weapons. It would be best if the UK and France leased some nuclear warheads to South Korea and Japan until they have built their own.

In the field of energy, peak oil was supposed to arrive twenty years ago. Terminals for importing LNG into the US were being built to allay the coming shortage of natural gas. Then the tight oil boom came along and the civilisational party continued. Import terminals for LNG were repurposed to become export terminals.

But fossil fuel resources are finite, exemplified by the history of coal and oil extraction in the UK:

Resource depletion of a finite resource tends to be symmetrical in an open market. The production decline is about as steep as the production rise. The UK had big endowments of coal and oil but now relies upon the kindness of strangers to keep the lights on.

Which begs the question of how long the tight oil boom in the US will last. There are three main basins: Eagle Ford, Bakken and Permian. Production from the Eagle Ford and Bakken peaked in 2014 and 2019 respectively. The number of rigs operating in these basins is also a fraction of their peak so production is now in permanent decline. Production in the Permian is still rising as operators are highgrading their drilled locations but the peak in operating rigs was eight years ago. Peak production from the Permian might be still two years away but that increase will only offset the declines from the Eagle Ford and Bakken:

The significance of this for the world is that the production decline coming for the world will be enhanced by the rapid decline of US tight oil production and thus extra-disruptive:

The chart of world oil production above shows that production outside of North America peaked in 2015.  The US tight oil boom supplied demand growth up to 2019 which is now the all time peak in world oil production.

The price of oil will go up a lot as a consequence but that won’t result in much more oil production. Peak discovery was back in the 1960s. What will happen is that the production of liquid fuels will shift to liquefaction of coal. The capital cost of this is likely to be around US$200,000 per daily barrel of capacity. That sounds like a lot but it is only US$547 per annual barrel and the price of oil might be US$250/bbl.

One lessson from the 2008 oil boom is that in a time of shortage the price of substitutes for oil will go to the oil price on an energy content basis. Eventually the prices of oil, coal, gas and LPG will equilibrate on the capital cost of converting them to liquid fuels, plastics, fertilisers and pesticides.

Which may go a long way to explaining why the three most bullish-looking charts in the Australian market are the three major coal stocks: Whitehaven, Yancoal and New Hope. At the moment the Whitehaven chart can be interpreted to be either a double top or the beginnings of a big ascending triangle:

New Hope and Yancoal are in symmetrical triangles which will be resolved in the next six months, as shown by the chart for New Hope:

What can’t go on forever, won’t. That includes Australia converting its power grid to wind and solar. One reason is that those things are capital intensive with most of that capital intensiveness driven by the cost of energy itself. So as energy costs rise, wind and solar costs will go through the roof, apart from being intermittent and inherently useless. There will be a discontinuity in the way energy is perceived. It will be a cathartic event for Australia which hopefully we will survive.

David Archibald is the author of The Anticancer Garden in Australia.