Dmitry Orlov: Peak Oil Lessons From The Soviet Union
[
Resumen de la entrevista en español]
The Nation and On The Earth Productions
Dmitry
Orlov, engineer and author, warns that the US's reliance on diminishing
fuel supplies might be sending it down the same path the Soviet Union
took before it collapsed.
In this fifth video in the series “Peak Oil and a Changing Climate” from The Nation
and On The Earth Productions, Orlov, who was an eyewitness to the
collapse of the Soviet Union, asserts that as oil becomes more expensive
and scarcer, the US will no longer be able to finance its oil addiction
and the economy will hit a wall.
“Sixty percent of all of our transportation fuels are imported—a lot
of that is on credit. A large chunk of the trade deficit is actually in
transportation fuels. When those stop arriving because of our inability
to borrow more money, then the economy is at a standstill,” he says.
Go here to learn more about “Peak Oil and a Changing Climate,” and to see the other videos in the series.
Transcript
I witnessed the Soviet
collapse, and then later on I couldn’t help but notice that
something very similar is happening to the United States. So, as a
matter of public service, I’ve tried to warn people of what to
expect. But I would just like to point out that I’m not any sort of
policy wonk, or a wannabe politician or an activist. All of those
things are very tangential to what I’m interested in, which
is basically to warn people and to equip them for what’s coming up.
The way collapse unfolds
is actually very interesting, because a lot of it has to do with
people’s faith in the status quo. As long as people think that
there’s something in it for them, they will cooperate. As soon as
they decide that there is nothing in it for them, they will cease to
cooperate and the system starts to crumble, cave in on itself. So
what we saw in the Soviet Union was political dysfunction where
basically the communist regime was so endemically corrupt, and so out
to steal as much as they could at the very end, that they really
didn’t even bother paying attention to whether they kept the system
going. The system was basically on autopilot until it crashed.
Something similar is happening here where we have people in all
branches of government, both political parties trying to prop
up the financial industry, which has become completely
irrelevant to most people in the United States, who don’t have
savings and are not creditworthy. They’re basically trying to use
up people’s savings and use up people’s retirement to prop up
this set of institutions that only help the very rich people, and
these very rich people are only rich on paper, they are "long paper," all of them. What they own is pieces of paper with letters and
numbers on them, which will turn out to be worthless. So this is all
just basically musical chairs, and something very similar was
happening in the Soviet Union, and something like that is happening
here.
The reason I started
talking about this is because I was, frankly, very worried about the
United States because I saw the United States as not nearly as well
prepared for collapse as the Soviet Union. You see, the Russian
people never had a great deal of faith in their government or in the
system, so they grew and gathered a lot of their own food, they relied
on private, personal connections, there was a very large gray or
black economy that provided most of what people needed. So when the
system went away, people had something to hold onto, they had their
personal relationships. Also the country was set up in a way that was
much more stable, with public transportation and with public housing.
People were not stranded and people were not dispossessed and put out
on the street and evicted. So all of those things allowed the
Russians to survive collapse, and all of those things are pretty much
missing in this country. Most people in this country would pretty
much just be out on the street starving unless they have an income,
unless they have credit cards or a bank account. They’re just
woefully unprepared.
There’s an element to
market economics that is very hard edged, and when it fails it hurts
people whether they can afford to pay their way out of it or not. If
they can afford to pay their way out of it, it basically hurts their
soul because they’re just leaving everybody else behind, and there’s
a lot of fear with it because your umbilical is connected to your
bank account. Once that goes away you’re just completely lost. Now
a lot of the dislocation that went on in the Soviet Union really had
to do with people being sort of set adrift in the official economy,
and all they could fall back on was people they knew, people they
could trust who would help them. The whole mindset of what’s mine
and is mine and I get it by paying for it is really not very survival-oriented. One of the shocking things about Americans is that they
have this innate faith that the rich people will abide, that there will
always be rich people. And the rich people have bought into this
dream, this idea that the various symbols that they have that tell
them they’re rich—pieces of paper and things—will actually be
meaningful moving forward, but it seems like the further you have to
fall, the harder you will fall. So I think that the wealthy
people in the United States are in for a much ruder awakening than
the people who are poor already. Really the most important thing to
consider is, who do you know and how will they help you even if you
don’t give them any money for it. It’s as basic as that. In the
case of the Russians it turned out that money was borderline
irrelevant for a lot of things that people needed to survive. That’s
what allowed them to survive. That’s not the case here, and its time
to get very worried about that.
The five stages of
collapse is an essay that I published two and a half years ago when
nobody was really talking about a financial collapse, people were
talking about a financial crisis. I decided to try to think of how
this proceeds in identifiable stages and I thought that basically
it’s sort of like the kubler-ross hierarchy relating to grief and
here it has to do with something similar which is psychological
thresholds that are breached. Various bits of faith that we have in
the status quo and in society and the people around us, when they’re
invalidated the change can be rather sudden whereas changes in the
physical world take time to work out. So the stages were: financial
collapse where our assumptions about risk in the future are
invalidated and political collapse, which is basically our
assumptions that there is a political system that functions and can
serve the interest of the people at some level, that is invalidated.
Then there is commercial collapse, which is the idea that you can get
whatever you need by paying for it is invalidated because your money
is worthless or you don’t have any anymore. Then there is social
and cultural collapse which I got by reading some cultural
anthropology. Basically social collapse is when the social
infrastructure that people have be it charities or social
organizations or community based groups cease to function because
they’re overwhelmed, they run out of resources and people can no
longer rely on them. Then cultural collapse, I got the idea from
reading Colin Turnbull who described a completely failed African
society of dispossessed hunter-gatherers where basically family
structure fell apart. Parents no longer brought up their children,
they didn’t take care of the old people, families didn’t even
share food. They basically got food and ate it by themselves and hid
it from each other and that was the level at which humans stopped
resembling humans and people no longer recognized each other. At that
point you’re almost talking about a different animal. Not what we
have evolved as, but something that we might devolve into.
I’m always asked this
question, where are we in the collapse scenario, the question is who
are we? I know a lot of people who are pretty far along in the
collapse scenario. I like to tell people that social and cultural
collapse has, in some places in this country, already run its course.
Financial collapse, well it depends on whether you’ve been
bankrupted or foreclosed yet, it’s a bit of, you could say that for
a lot of people collapse has already arrived. It just hasn’t been
widely distributed and people don’t actually share stories about it
unless they actually know each other personally. So I would say this
is something that is proceeding, you could say that the United States
is already bankrupt as a country. I don’t think that you could
actually get a cogent argument against that from anyone who knows
what they’re talking about. It’s just that the aftermath of that
hasn’t really completely arrived. We’re not yet completely
immersed in the consequences of that. Now, in terms of what could be
done to salvage the situation, well a lot of things would have to
change rather dramatically. Right now there’s basically a
stranglehold on political power in this country by an elite that
divides itself into two camps Republicans and Democrats and what have
you, maybe even more, but its really the same bunch of people. This
same bunch of people is almost militant in refusing to look at
reality and it’s almost a question of them at some point being
wheeled out of their offices along with the office furniture. Its not
like they can be really spoken to without it being one’s complete
waste of time. So I see that quite similar to what the old communists
went through. Basically they went from being in charge to being
crazy, to being insane and being disregarded. I see something very
similar happening here.
The question for why
there’s so much denial is a really interesting one. Denial is a
large question in itself. There are certainly a few aspects to it
that are interesting. One is that it makes it possible for people to
lead what amounts to a meaningless dead end existence because the
moment they realize that its meaningless and its dead-end then
they’re forced to do something about it and if they can’t think
of anything useful to do about it then they’re stuck, they’re
stuck with a mental difficulty. So denial is a way of avoiding mental
difficulties. Another part of it is that if you actually have a
long-term perspective on the future that makes you very unpopular in
any given group of people because the future, as it stands in a
market economy, is a faulty product. It cannot be sold for any price.
No sane person would pay for it. So if we live in an environment
where we sell ourselves by putting things on our resumes and
promoting ourselves in various ways and thinking what we’re worth
in a market economy, actually being honest about what we’re looking
forward to, all of us, makes us less successful as individuals and so
this is something that we avoid doing.
I think what’s going to
happen is the dissolution of the United States as a political and
economic entity. It will more or less fade from the world scene in
the same way that the Soviet Union faded from the world scene. Parts
of it will later be reborn as something that we might have a lot more
trouble imagining because there isn’t something called Russia that
part of the Soviet Union. There isn’t something similar to that in
the United States. It’s really a bunch of territories, very
disjointed territories held together by Washington. So if Washington
fails then it’s not clear what is going to hold these territories
together.
The reason Washington is
likely to fail is really the same reason that Moscow failed which is
runaway debt and national bankruptcy. It was not even the level of
debt it was the fact that the debt could not be expanded or taken on
at an ever-increasing rate with never any reason for anyone to expect
that the gap can ever be closed. So what happened in Moscow was that
Moscow could no longer finance the periphery and the periphery
decided to go its own way. We’re something similar in this country
where California could do quite well if they stop paying the federal
tax. So if they left the union their finances would be much better
and this is what happened in the Soviet Union. This is what we’re
witnessing right now in the United States. There are other
similarities as well. One of the largest ones is, in the Soviet Union
the armed forces more or less took on a life of their own, they ate
the national budget, about a quarter of it, and also they couldn’t
deliver any results. So it’s a striking similarity that the mighty
Soviet army lost in Afghanistan and now the mighty American army is
doing exactly the same thing. It amazes me that dying empires shoot
straight for Afghanistan to have Afghanis deliver the coup de grace
and this is what’s happening to the United States as well.
Well the power vacuum that
was left when the Soviet Empire collapsed was not a complete vacuum.
There was a lot of black market economics active within the Soviet
Union, there was a lot of what would be called corruption, but really
they were workable ways of circumventing an unworkable system. There
is some of that in this country as well. Strangely enough, the people
who are the best positioned to start a full-blown black market
economy in the United States are the narco-cartels. So they’re the
next aristocracy as far as the Americans are concerned. They will be
the ones moving in and replacing the power vacuum. You already see it
happening in certain parts of the country close to the Mexican
border. You can see that the local police and law enforcement are in
no position to oppose them. They’re much better organized and
armed. So this is what we can look forward to. A lot of that happened
in Russia as well there were a lot of ethnic mafias that moved in.
The Chechens controlled a lot of the trade for quite a while, even in
produce and things like that. So we can look forward to quite a bit
of that here as well.
There was a lot of what
you could call “corporatocracy” in the Soviet Union as well.
There were a lot of very large state-owned enterprises that went on
existing because they didn’t really have a supply chain, they were
empires onto themselves. A place like Norilsk Nickel for instance
that makes a lot of the nickel in the world was pretty much a company
town. That was a standard thing in Russia. It’s not just a factory
but also cafeterias and kindergartens, and hospitals, retirement
homes, and just about everything else. So these were economic empires
onto themselves that continued to function. A lot of them, once there
was no workable currency, they resorted to barter trade and they
would trade food for something that they made or stock they had
accumulated over the years. The American “corporatocracy” is very
much into just in time delivery and everything is network based and
that makes it extremely fragile and I don’t see that pattern
holding. A while ago I thought that some large companies like Google
for instance could take a lot of things in house and Google has been
making forays into energy and private currencies and all sorts of
things. They have money to throw at experiments like that but they’re
not about to achieve any sort of sustainability so when the
surrounding economy crumbles they will probably cease to function as
well.
People look at the short
term. Energy availability in the short term. Basically the fact that
energy demand shrank because of the recession/depression. That bought
us a little bit of time but its more or less inevitable that some
kind of economic growth somewhere will resume at some point and then
whatever part of the economy that tries to grow will hit a brick wall
again and the harder economies try to grow from this point on, the
worse they will fail. The more growth dependent and growth addicted
they are the worse they will fail. Countries vary along a set of
parameters between how well they can absorb lack of economic growth;
some can do it pretty well, some not at all. So this is really what
we’re looking at now. We could have a scenario where entire parts
of the globe suddenly go dark. I think the United States is one of
them because 60% of all of the transportation fuels are imported, a
lot of that is on credit. A large chunk of the trade deficit is
actually transportation fuels, so when those stop arriving because of
inability to borrow more and more money then the economy is at a
standstill and after a while the lights go out. Now, what that buys
the rest of the world is about 1/3 of all the energy consumed in the
United States. The United States consumes about a third of the global
energy supply. That suddenly becomes available to the rest of the
world. So you could theoretically have other countries grow for
another decade or more while the United States goes dark and
disappears, fades from the world scene much as the Soviet Union did
after it collapsed.
The important thing to
understand about collapse is that it’s brought on by overreach and
overstretch and people being zealous and trying too hard. Its not
brought on by people being laid back and doing the absolute minimum.
Americans could very easily feed themselves and clothe themselves and
have a place to live working maybe a hundred days a year. You know,
it’s a rich country in terms of resources there’s really no
reason to work maybe more than a third of your time and that’s sort
of a standard pattern in the world. But if you want to build a huge
empire and have endless economic growth and have the largest number
of billionaires on the planet then you have to work over forty hours
a week all the time and if you don’t then you’re in danger of
going bankrupt. So that’s the predicament that people have ended up
in. Now the cure of course is not to do the same thing even harder,
so what people have to get used to is the idea that most things
aren’t worth doing anyway and things really slow down when the
economy goes away. The idea is to do the absolute bare minimum that
is essential and just find interesting ways to while away the time
because not much is going to be happening. So walking down the road
is an all day affair whereas before it was a three-minute drive but
now you don’t drive, you have to walk so it’s an all day affair.
People just have to learn to slow way down and have a lot more
patience, a lot more patience with each other. Those that don’t
will probably end up killing each other in due course, that’s
probably a period of time that most people will want to sit out, wait
until the dust settles. A lot of people just don’t have the right
character to deal with collapse. They’ll be running around trying
to fix things. That’s the opposite of what they should be doing.
Peak oil is getting to be
a really boring subject. Most people don’t realize that yet. It’s
something that becomes obvious after the fact, its something that
shows up in aggregate production statistics and those statistics tend
to be retroactively adjusted as better numbers come in. So now we’re
pretty sure that it was in 2005-2006 for conventional oil, that is
oil that comes out in oil form out of the ground on dry land, out of
conventional oil wells. All liquids, which includes tar sands and
coal to liquid conversion and corn based ethanol and just any other
muck that you could possibly get liquid fuels from, that peaked in
2008. So it’s all behind us.
The thing that’s worth
discussing now is what post peak production looks like. A lot of
people look at these charts that have a very smooth decline curve
that always looked a little strange to me. So I did a lot of research
into trying to figure out what that meant and it turned out that its
just sheer nonsense there’s no reality behind it at all. I’ve
identified many many factors that combine in various unpredictable
ways, its really too complicated to predict, but the chance of this
very smooth decline, I would say, is zero. Its going to be a
step-wise decline and various parts of the planet will be cut off
from transportation fuel permanently at various times. There will be
disruptions and then it will be a permanent cut-off from that point
on. So what people should be planning on is not slightly more
expensive gasoline, or slightly less gasoline or heating oil or
diesel fuel, but fuel that you might have for special occasions, so
for ambulances you might have it longer than for taxis, things like
that. What people should really be planning for is life without
fossil fuels at all and that is actually a tall order. It takes a lot
of thinking to prepare for that right now.
The whole question of die
off produces very strong emotions in people, but to just lay it out
in a non-emotional way. We had this thing called the green
revolution, which is probably the worst misnomer we have because it
was basically the fossil fuel food revolution. It's growing food with
fossil fuels that allowed the earth’s population to go to 6 and a
half billion and there’s no reason to think that it can be
sustained through means other than fossil fuels inputs into
industrial agriculture. So the question is what happens to all these
people when they can no longer be fed. Now, people think that this is
in the future but its not. Russia is back to importing grain after
the disastrous harvest of this year. That’s a bad sign right there,
Russia used to be a grain exporter until this year and so that is
happening in more and more parts of the world. Now, die-offs, people
have trouble imagining them. There was a bit of a die off in the
Soviet Union after the Soviet Union collapsed. Life expectancy
plummeted. The odd thing about it, I was there during that time, and
it’s not really noticeable unless you happen to be dropping by the
hospitals and the morgues all the time and going to a lot of
funerals. You just don’t know that people are going away. Its more
that people look at their school photos and realize that half their
class is dead. And that’s a bit of a shock, but its more of a shock
when you realize it than when its happening because you don’t
really realize its happening. In fact human populations can shrink
quite dramatically without anyone even within those populations
really noticing. People just accept whatever is happening, tune it
out, stop paying attention or cope with it some way. With that said,
ok we have 6 and a half billion people without fossil fuel inputs
into agriculture might sustain one billion but that’s without
climate change. Now the reason we have agriculture is because we’ve
had ten thousand years of stable climate, which seems to have ended.
So that is something to take into consideration as well. As
hunter/gatherers as opposed to farmers we would not be one billion
without fossil fuel input, we would be a lot smaller population than
that even. So this is one of those things that people try not to
think about and the question that comes to my mind is why should we
even think about it? I mean, whatever happens, happens. We don’t
get to decide how many people survive all we get to do is you know,
try to survive, and find ways to do it. Thinking about mind numbing
billions of people that will no longer be around is not really a
productive activity given that there is nothing we can do about it.
So I try to limit discussion of that because I just don’t see it
going anywhere useful.
Well the whole climate
change debate, it almost makes me laugh because people say things and
the words, if you look at it what do they mean, they don’t mean
anything and the most important question is “what do we do?” I
have a problem with defining we and I have a problem with defining
“do” just on a semantic level, I think that that particular
question is completely meaningless. “We” includes melting tundra
we don’t actually tell it what to do it does whatever it wants to.
And “do” involves people who are completely beyond our control
politically, economically, or otherwise. So it doesn’t really even
matter what we decide. People have this inflated picture of what
policy can achieve that is not based on what policy has achieved in
the past. There is one example of a great policy issue that Al Gore
talks about which is limitations on refrigerants that were destroying
the ozone layer. Well that was a bit of a success but it only
involved a few chemical manufacturers around the planet. So those
could be individually talked to and replacements could be found. What
they’ve achieved is that the ozone hole is now not growing anymore
but its not shrinking either so it’s not really a complete success
and that’s really the only success story that they have. In terms
of global warming it seems like we’re in for a roller coaster ride.
It’s not even that we can predict what’s happen, but we can
certainly predict that there will be a lot of upheaval. We don’t
need scientists to tell us that. I’ve been living in New England
for decades now and I’m used to the ocean being cold. So if in the
middle of the summer I jump in the ocean and its body temperature you
don’t have to be a scientist to tell me that something is going
very strangely here. You know, it’s really quite obvious. People
who are a little bit more in tune with the elements, people who have
spent a lot of time outdoors, you can talk to them. Very few of them
will tell you that, oh this is nothing out of the ordinary, this is
the usual thing. So we’re in for a great deal of climate upheaval.
I would predict that when the industrial economies around the world
start crashing there will be a huge amount of reforestation that will
happen. So then we might have a mini ice age because of that and then
that might run its course and something else will happen. The kind of
goldilocks climate that has allowed human populations to swell to
billions of individuals, that period of climatic history seems to
have ended already. We’re in a different planet now; we’re in a
different world.
