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Domino Effect and Interdependencies PDF Print E-mail
Thursday, 17 February 2005

The modern, commercial agricultural miracle that feeds all of us and much of the rest of the world is completely dependent on the flow, processing and distribution of oil, and technology is critical to maintaining that flow. Without timely and expensive inputs, yields of all basic food crops, as well as seed for the following year's crops, would plummet or stocks simply disappear because....

*oil refined for gasoline and diesel is critical to run the tractors, combines and other farm vehicles and equipment that plant, spray the herbicides and pesticides, and harvest/transport food and seed

* food processors rely on the just-in-time (gasoline-based) delivery of fresh or refrigerated food

*food processors rely on the production and delivery of food additives including vitamins and minerals, emulsifiers, preservatives, colouring agents, etc. Many are oil-based. Delivery is oil-based.)

*food processors rely on the production and delivery of boxes, metal cans, printed paper labels, plastic trays, cellophane for microwave/convenience foods, glass jars, plastic and metal lids with sealing compounds. Many of these are essentially oil-based.

*delivery of finished food products to distribution centres in refrigerated trucks. Oil-based, daily, just-in-time shipment of food to grocery stores, restaurants, hospitals, schools, etc., all oil-based, customer drives to grocery store to shop for supplies, often several times a week.

So what, you ask? We have plenty of oil? Think again.

Our food supply, and our economic survival as a whole, depends on the steady availability of reasonably priced oil. Oil is our Achilles heel. We use oil every day to sustain our current lifestyles. We have a small amount of oil stockpiled to see us through any short term disruption. Life as we know it stops if we drain that supply. The big question is, when.

Bottom line?

If we think we are food secure here and in other industrialized countries simply because we have gas in the car, frankly, we are delusional. Despite the appearance of an endless bounty of food, it is a fragile bounty, dependent upon the integrity of the global oil production, refining and delivery system. That system is entirely dependent on the thread of technology. Modern, technology-based agriculture produces both food, and seeds for next year's food, just-in-time. There are precious little reserves of either food or seeds to sustain any protracted interruption.

In the warm, sunny and food-abundant summer and fall, the "dumb" gophers, squirrels and ants know enough to store food for not-so-abundant days. Our grandparents and their grandparents knew how to grow and preserve their own food to ensure their survival. What makes us think that we are different--that we don't have to look ahead to leaner days when we might have to depend only on ourselves to eat? Technology and the incredibly rich tapestry it has made possible has created a false sense of security for so many of us. The thread is flawed; the tapestry is now fragile; famines are possible. We must take that seriously.

A Circle of Dominoes

The fact that each infrastructure element of modern society is threatened by the Peak Oil problem is not well established. It has not been thoroughly investigated or publicized, nor have the effect of the interdependencies of these infrastructure sectors and the overall probabilities of society staying up or going down.

It is in the interdependencies, in fact, where the soul of the Peak Oil problem lives. That these interdependencies have been largely ignored by the press and the public is perhaps the most alarming realization of all. Almost nobody has a realistic understanding of the bottom line odds we really face. . . .

The iron triangle is three interconnected systems: power, telecommunications, and banking. These three systems make modern society possible

The three core infrastructure sectors

Three sectors must remain in operation in order for the rest of society to function. These are, as already stated above, banking, power, and telecommunications. The failure of any of these three sectors will cause the failure of the other two within a matter of days or weeks (at most), which will then result in the failure of civilization as we know it.

For example, the loss of power would render banks and phone companies useless. The loss of telecommunications would render power companies and banks useless. And the loss of banking would eventually render power companies and telecomm companies useless (although this would take longer). If banking, power, and telecommunications fail, the affected nation (or planet) suffers mass famine, unprecedented internal turmoil, and eventually returns to a pre-1900's or earlier civilization.

But this definition is incorrect for local, personal planning. The local iron triangle is power, water, and telecommunications. The modern urban world could survive without fractional reserve banking, although a horrendous depression would result in the transition to an alternative means of payment. But a modern city could not exist without power and telecommunications (which depend on each other) and water and sewerage treatment facilities. This item alone could render all other items irrelevant. If water treatment facilities fail, the affected cities are wiped out. People either leave or they die. And dead people can't work at the banks, the telecomm companies and the power companies. Without water, no city survives. But by far the greatest of these is power.

The problem is that, overall, human beings have developed a tendency to deal with problems on an ad hoc basis - i.e., to deal with "problems of the moment". This does not foster an attitude of seeing a problem embedded in the context of another problem.

Domino Effect and Interdependencies

We live in an increasingly interdependent world in which complexity has been magnified as computers and technology progressed. The relationships between businesses, industry and government are like a spider's web with many nodes. For the whole web to remain intact, individual nodes must be attached at all times. Computers have made us interdependent as never before.

This networked interdependcy of the economy is not as resilient as it may appear. In fact, it is more fragile as there more nodes to fail in a complex modern industrial economy. As long as there are no major shocks everything runs smoothly. When there is an outside shock (like the 1970's oil shortages), the resulting economic dislocation cascades through every sector causing immediate and staggering losses. The sudden rise in oil prices raises business costs, which in turn lead to cut backs, lower profits and layoffs. Some companies will go out of business, causing a downturn in the general economy which then feeds on its self in a downward spiral.

Then we must deal with business failures and disruptions of suppliers to which the death of only a few would severely hamper or completely halt any large and complex large corporation's ability to produce a product or service. So even if company 'A' is able to function, it will have to deal with suppliers who may not be able to deliver because of other system failures and disruptions. Losses are enormous if company 'A' cannot temporarily deliver its product and therefore collect sales revenue. By the time it finds and co-ordinates other suppliers, if it can find them, to keep its production or business running, it may already be too late; it will have gone bankrupt.

"There's no point in sugar-coating the problem. If we don't get this thing sorted, we will see something worse than your average Saturday-night horror film."

Aside from failures within industries and suppliers, organizations must worry about outside factors which enable it to conduct business. This means water, electricity, heat and fuel must be freely flowing, and a means of payment, financing and capitalization (banking and stock market) be operational.

This is the circle of dominoes which threatens:

To keep fuel flowing, you need electricity.

To keep electricity flowing, you need fuel.

To keep both operational, you need a means of payment.

To keep a (modern) means of payment going, you need functional telecommunications system to transfer funds. With out a functional telecommunication or banking system, the economy and division of labour would utterly collapse.

Moving beyond local and regional interdepencies is the relationship of finance and trade between modern nations which, to a degree, has recently created a Global Economic Instability which will create financial havoc.

This may mean a great shift in decentralization of organizational and institutional power to the local level lies ahead. It could also mean a historic consolidation of power into the oligopolies. Or even a combination thereof. In the case of Peak Oil it could very well be true: bigger they are the harder they fall. One thing is certain about Peak Oil... the dominoes will be very large, and will fall very hard.


This is different from "social unrest." This represents the tendency of the population to cause huge problems in their eagerness to stock up on emergency items like food. If the grocery stores are cleaned out, it interferes with the normal operation of "life." The possibility of having no food is a major distraction that could dramatically affect the population's ability to do anything productive (like running the banks, the power companies, etc.).

This reveals the vulnerability of any highly-specialized, high division-of-labour civilization. One weak link in the chain can disconnect the other sectors from critical resources, causing a cascading disruption in services that takes out subsequent sectors, one by one, resulting in a complete collapse.

Perhaps most interesting is that this situation has only existed for a few decades, and the very technology that gave us the ability to run a high division-of-labour civilization is precisely the same technology that now threatens to take it away.

The interconnection problem is what threatens us. Even if one organization could get through, it is still part of a system in which all organizations depend directly or indirectly on oil and oil based products. The division of labour is at risk. This means that our civilization is at risk.


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