Video Interview: The Nation

 
Dmitry Orlov: Peak Oil Lessons From The Soviet UnionThe 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 Sovietcollapse and then later on I couldn't help but noticing thatsomething very similar is happening to the United States. So as amatter of public service I've tried to warn people of what toexpect but I would just like to point out that I'm not any sort ofpolicy wonk or a wanna-be-politician or an activist. All of thosethings are sort of, very tangential to what I'm interested in whichis basically to warn people and equip them for what's coming up.
The way collapse unfoldsis actually very interesting because a lot of it has to do withpeople's faith in the status quo. As long as people think thatthere's something in it for them, they will cooperate. As soon asthey decide that there is nothing in it for them, they will cease tocooperate and the system starts to crumble, cave in on itself. Sowhat we saw in the Soviet Union was a political dysfunction wherebasically the communist regime was so endemically corrupt and so outto steal as much as they could at the very end that they reallydidn't even bother paying attention to whether they kept the systemgoing, the system was basically on autopilot until it crashed.Something similar is happening here where we have people in allbranches of government, both political parties, really trying to propup the financial industry which has really become completelyirrelevant to most people in the United States who don't havesavings and are not credit worthy. They're basically trying to useup people's savings and use up people's retirement to prop upthis set of institutions that only help the very rich people andthese very rich people are only rich on paper, they are long paper.All of them. What they own is pieces of paper with letters andnumbers on them, which will turn out to be worthless. So this is alljust basically musical chairs and something very similar washappening in the Soviet Union and something like that is happeninghere.
The reason I startedtalking about this is because I was frankly very worried about theUnited States because I saw the United States as not nearly as wellprepared for collapse as the Soviet Union. You see, the Russianpeople never had a great deal of faith in their government or in thesystem so they grew and gathered a lot of their own food, they reliedon private, personal connections, there was a very large grey orblack economy that provided most of what people needed. So when thesystem went away, people had something to hold onto, they had theirpersonal relationships. Also the country was set up in a way that wasmuch more stable with public transportation and with public housing.People were not stranded and people were not dispossessed and put outon the street and evicted. So all of those things allowed theRussians to survive collapse and all of those things are pretty muchmissing in this country. Most people in this country would prettymuch just be out on the street starving unless they have an income,unless they have credit cards or a bank account. They're justwoefully unprepared.
There's an element tomarket economics that is very hard edged and when it fails it hurtspeople whether they can afford to pay their way out of it or not. Ifthey can afford to pay their way out of it, it basically hurts theirsoul because they're just leaving everybody else behind and there'sa lot of fear with it because your umbilical is connected to yourbank account, once that goes away you're just completely lost. Nowa lot of the dislocation that went on in the Soviet Union really hadto do with people being sort of set adrift in the official economyand all they could fall back on was people they knew, people theycould trust who would help them. The whole mindset of what's mineand is mine and I get it by paying for it is really not very survivaloriented. One of the shocking things about Americans is that theyhave this innate faith that the rich people will abide, there willalways be rich people. And the rich people have bought into thisdream, this idea that the various symbols that they have that tellthem they're rich, pieces of paper and things will actually bemeaningful moving forward but it seems like the further you have tofall the harder you will fall. So I think, you know, the wealthypeople in the United States are in for a much ruder awakening thatthe people who are poor already. Really the most important thing toconsider is, who do you know and how will they help you even if youdon't give them any money for it. It's as basic as that. In thecase of the Russians it turned out that money was borderlineirrelevant for a lot of things that people needed to survive. That'swhat allowed them to survive. That's not the case here and its timeto get very worried about that.
The five stages ofcollapse is an essay that I published two and a half years ago whennobody was really talking about a financial collapse, people weretalking about a financial crisis. I decided to try to think of howthis proceeds in identifiable stages and I thought that basicallyit's sort of like the kubler-ross hierarchy relating to grief andhere it has to do with something similar which is psychologicalthresholds that are breached. Various bits of faith that we have inthe status quo and in society and the people around us, when they'reinvalidated the change can be rather sudden whereas changes in thephysical world take time to work out. So the stages were: financialcollapse where our assumptions about risk in the future areinvalidated and political collapse, which is basically ourassumptions that there is a political system that functions and canserve the interest of the people at some level, that is invalidated.Then there is commercial collapse, which is the idea that you can getwhatever you need by paying for it is invalidated because your moneyis worthless or you don't have any anymore. Then there is socialand cultural collapse which I got by reading some culturalanthropology. Basically social collapse is when the socialinfrastructure that people have be it charities or socialorganizations or community based groups cease to function becausethey're overwhelmed, they run out of resources and people can nolonger rely on them. Then cultural collapse, I got the idea fromreading Colin Turnbull who described a completely failed Africansociety of dispossessed hunter-gatherers where basically familystructure fell apart. Parents no longer brought up their children,they didn't take care of the old people, families didn't evenshare food. They basically got food and ate it by themselves and hidit from each other and that was the level at which humans stoppedresembling humans and people no longer recognized each other. At thatpoint you're almost talking about a different animal. Not what wehave evolved as, but something that we might devolve into.
I'm always asked thisquestion, where are we in the collapse scenario, the question is whoare we? I know a lot of people who are pretty far along in thecollapse scenario. I like to tell people that social and culturalcollapse has, in some places in this country, already run its course.Financial collapse, well it depends on whether you've beenbankrupted or foreclosed yet, it's a bit of, you could say that fora lot of people collapse has already arrived. It just hasn't beenwidely distributed and people don't actually share stories about itunless they actually know each other personally. So I would say thisis something that is proceeding, you could say that the United Statesis already bankrupt as a country. I don't think that you couldactually get a cogent argument against that from anyone who knowswhat they're talking about. It's just that the aftermath of thathasn't really completely arrived. We're not yet completelyimmersed in the consequences of that. Now, in terms of what could bedone to salvage the situation, well a lot of things would have tochange rather dramatically. Right now there's basically astranglehold on political power in this country by an elite thatdivides itself into two camps Republicans and Democrats and what haveyou, maybe even more, but its really the same bunch of people. Thissame bunch of people is almost militant in refusing to look atreality and it's almost a question of them at some point beingwheeled out of their offices along with the office furniture. Its notlike they can be really spoken to without it being one's completewaste of time. So I see that quite similar to what the old communistswent through. Basically they went from being in charge to beingcrazy, to being insane and being disregarded. I see something verysimilar happening here.
The question for whythere's so much denial is a really interesting one. Denial is alarge question in itself. There are certainly a few aspects to itthat are interesting. One is that it makes it possible for people tolead what amounts to a meaningless dead end existence because themoment they realize that its meaningless and its dead-end thenthey're forced to do something about it and if they can't thinkof anything useful to do about it then they're stuck, they'restuck with a mental difficulty. So denial is a way of avoiding mentaldifficulties. Another part of it is that if you actually have along-term perspective on the future that makes you very unpopular inany given group of people because the future, as it stands in amarket 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 environmentwhere we sell ourselves by putting things on our resumes andpromoting ourselves in various ways and thinking what we're worthin a market economy, actually being honest about what we're lookingforward to, all of us, makes us less successful as individuals and sothis is something that we avoid doing.
I think what's going tohappen is the dissolution of the United States as a political andeconomic entity. It will more or less fade from the world scene inthe same way that the Soviet Union faded from the world scene. Partsof it will later be reborn as something that we might have a lot moretrouble imagining because there isn't something called Russia thatpart of the Soviet Union. There isn't something similar to that inthe United States. It's really a bunch of territories, verydisjointed territories held together by Washington. So if Washingtonfails then it's not clear what is going to hold these territoriestogether.
The reason Washington islikely to fail is really the same reason that Moscow failed which isrunaway debt and national bankruptcy. It was not even the level ofdebt it was the fact that the debt could not be expanded or taken onat an ever-increasing rate with never any reason for anyone to expectthat the gap can ever be closed. So what happened in Moscow was thatMoscow could no longer finance the periphery and the peripherydecided to go its own way. We're something similar in this countrywhere California could do quite well if they stop paying the federaltax. So if they left the union their finances would be much betterand this is what happened in the Soviet Union. This is what we'rewitnessing right now in the United States. There are othersimilarities as well. One of the largest ones is, in the Soviet Unionthe armed forces more or less took on a life of their own, they atethe national budget, about a quarter of it, and also they couldn'tdeliver any results. So it's a striking similarity that the mightySoviet army lost in Afghanistan and now the mighty American army isdoing exactly the same thing. It amazes me that dying empires shootstraight for Afghanistan to have Afghanis deliver the coup de grasand this is what's happening to the United States as well.
Well the power vacuum thatwas left when the Soviet Empire collapsed was not a complete vacuum.There was a lot of black market economics active within the SovietUnion, there was a lot of what would be called corruption, but reallythey were workable ways of circumventing an unworkable system. Thereis some of that in this country as well. Strangely enough, the peoplewho are the best positioned to start a full-blown black marketeconomy in the United States are the narco-cartels. So they're thenext aristocracy as far as the Americans are concerned. They will bethe ones moving in and replacing the power vacuum. You already see ithappening in certain parts of the country close to the Mexicanborder. You can see that the local police and law enforcement are inno position to oppose them. They're much better organized andarmed. So this is what we can look forward to. A lot of that happenedin 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 inproduce and things like that. So we can look forward to quite a bitof that here as well.
There was a lot of whatyou could call "corporatocracy" in the Soviet Union as well.There were a lot of very large state-owned enterprises that went onexisting because they didn't really have a supply chain, they wereempires onto themselves. A place like Norilsk Nickel for instancethat makes a lot of the nickel in the world was pretty much a companytown. That was a standard thing in Russia. It's not just a factorybut also cafeterias and kindergartens, and hospitals, retirementhomes, and just about everything else. So these were economic empiresonto themselves that continued to function. A lot of them, once therewas no workable currency, they resorted to barter trade and theywould trade food for something that they made or stock they hadaccumulated over the years. The American "corporatocracy" is verymuch into just in time delivery and everything is network based andthat makes it extremely fragile and I don't see that patternholding. A while ago I thought that some large companies like Googlefor instance could take a lot of things in house and Google has beenmaking forays into energy and private currencies and all sorts ofthings. They have money to throw at experiments like that but they'renot about to achieve any sort of sustainability so when thesurrounding economy crumbles they will probably cease to function aswell.
People look at the shortterm. Energy availability in the short term. Basically the fact thatenergy demand shrank because of the recession/depression. That boughtus a little bit of time but its more or less inevitable that somekind of economic growth somewhere will resume at some point and thenwhatever part of the economy that tries to grow will hit a brick wallagain and the harder economies try to grow from this point on, theworse they will fail. The more growth dependent and growth addictedthey are the worse they will fail. Countries vary along a set ofparameters between how well they can absorb lack of economic growth;some can do it pretty well, some not at all. So this is really whatwe're looking at now. We could have a scenario where entire partsof the globe suddenly go dark. I think the United States is one ofthem because 60% of all of the transportation fuels are imported, alot of that is on credit. A large chunk of the trade deficit isactually transportation fuels, so when those stop arriving because ofinability to borrow more and more money then the economy is at astandstill and after a while the lights go out. Now, what that buysthe rest of the world is about 1/3 of all the energy consumed in theUnited States. The United States consumes about a third of the globalenergy supply. That suddenly becomes available to the rest of theworld. So you could theoretically have other countries grow foranother decade or more while the United States goes dark anddisappears, fades from the world scene much as the Soviet Union didafter it collapsed.
The important thing tounderstand about collapse is that it's brought on by overreach andoverstretch and people being zealous and trying too hard. Its notbrought on by people being laid back and doing the absolute minimum.Americans could very easily feed themselves and clothe themselves andhave 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 noreason to work maybe more than a third of your time and that's sortof a standard pattern in the world. But if you want to build a hugeempire and have endless economic growth and have the largest numberof billionaires on the planet then you have to work over forty hoursa week all the time and if you don't then you're in danger ofgoing bankrupt. So that's the predicament that people have ended upin. 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 thingsaren't worth doing anyway and things really slow down when theeconomy goes away. The idea is to do the absolute bare minimum thatis essential and just find interesting ways to while away the timebecause not much is going to be happening. So walking down the roadis an all day affair whereas before it was a three-minute drive butnow 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 morepatience, a lot more patience with each other. Those that don'twill probably end up killing each other in due course, that'sprobably a period of time that most people will want to sit out, waituntil the dust settles. A lot of people just don't have the rightcharacter to deal with collapse. They'll be running around tryingto fix things. That's the opposite of what they should be doing.
Peak oil is getting to bea really boring subject. Most people don't realize that yet. It'ssomething that becomes obvious after the fact, its something thatshows up in aggregate production statistics and those statistics tendto be retroactively adjusted as better numbers come in. So now we'repretty sure that it was in 2005-2006 for conventional oil, that isoil that comes out in oil form out of the ground on dry land, out ofconventional oil wells. All liquids, which includes tar sands andcoal to liquid conversion and corn based ethanol and just any othermuck that you could possibly get liquid fuels from, that peaked in2008. So it's all behind us.
The thing that's worthdiscussing now is what post peak production looks like. A lot ofpeople look at these charts that have a very smooth decline curvethat always looked a little strange to me. So I did a lot of researchinto trying to figure out what that meant and it turned out that itsjust sheer nonsense there's no reality behind it at all. I'veidentified many many factors that combine in various unpredictableways, its really too complicated to predict, but the chance of thisvery smooth decline, I would say, is zero. Its going to be astep-wise decline and various parts of the planet will be cut offfrom transportation fuel permanently at various times. There will bedisruptions and then it will be a permanent cut-off from that pointon. So what people should be planning on is not slightly moreexpensive gasoline, or slightly less gasoline or heating oil ordiesel fuel, but fuel that you might have for special occasions, sofor ambulances you might have it longer than for taxis, things likethat. What people should really be planning for is life withoutfossil fuels at all and that is actually a tall order. It takes a lotof thinking to prepare for that right now.
The whole question of dieoff produces very strong emotions in people, but to just lay it outin a non-emotional way. We had this thing called the greenrevolution, which is probably the worst misnomer we have because itwas basically the fossil fuel food revolution. It's growing food withfossil fuels that allowed the earth's population to go to 6 and ahalf billion and there's no reason to think that it can besustained through means other than fossil fuels inputs intoindustrial agriculture. So the question is what happens to all thesepeople when they can no longer be fed. Now, people think that this isin the future but its not. Russia is back to importing grain afterthe 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 ishappening in more and more parts of the world. Now, die-offs, peoplehave trouble imagining them. There was a bit of a die off in theSoviet Union after the Soviet Union collapsed. Life expectancyplummeted. The odd thing about it, I was there during that time, andit's not really noticeable unless you happen to be dropping by thehospitals and the morgues all the time and going to a lot offunerals. You just don't know that people are going away. Its morethat people look at their school photos and realize that half theirclass is dead. And that's a bit of a shock, but its more of a shockwhen you realize it than when its happening because you don'treally realize its happening. In fact human populations can shrinkquite dramatically without anyone even within those populationsreally noticing. People just accept whatever is happening, tune itout, stop paying attention or cope with it some way. With that said,ok we have 6 and a half billion people without fossil fuel inputsinto agriculture might sustain one billion but that's withoutclimate change. Now the reason we have agriculture is because we'vehad ten thousand years of stable climate, which seems to have ended.So that is something to take into consideration as well. Ashunter/gatherers as opposed to farmers we would not be one billionwithout fossil fuel input, we would be a lot smaller population thanthat even. So this is one of those things that people try not tothink about and the question that comes to my mind is why should weeven think about it? I mean, whatever happens, happens. We don'tget 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 numbingbillions of people that will no longer be around is not really aproductive 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 itgoing anywhere useful.
Well the whole climatechange debate, it almost makes me laugh because people say things andthe words, if you look at it what do they mean, they don't meananything and the most important question is "what do we do?" Ihave a problem with defining we and I have a problem with defining"do" just on a semantic level, I think that that particularquestion is completely meaningless. "We" includes melting tundrawe don't actually tell it what to do it does whatever it wants to.And "do" involves people who are completely beyond our controlpolitically, economically, or otherwise. So it doesn't really evenmatter what we decide. People have this inflated picture of whatpolicy can achieve that is not based on what policy has achieved inthe past. There is one example of a great policy issue that Al Goretalks about which is limitations on refrigerants that were destroyingthe ozone layer. Well that was a bit of a success but it onlyinvolved a few chemical manufacturers around the planet. So thosecould be individually talked to and replacements could be found. Whatthey've achieved is that the ozone hole is now not growing anymorebut its not shrinking either so it's not really a complete successand that's really the only success story that they have. In termsof 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 cancertainly predict that there will be a lot of upheaval. We don'tneed scientists to tell us that. I've been living in New Englandfor decades now and I'm used to the ocean being cold. So if in themiddle of the summer I jump in the ocean and its body temperature youdon't have to be a scientist to tell me that something is goingvery strangely here. You know, it's really quite obvious. Peoplewho are a little bit more in tune with the elements, people who havespent a lot of time outdoors, you can talk to them. Very few of themwill tell you that, oh this is nothing out of the ordinary, this isthe usual thing. So we're in for a great deal of climate upheaval.I would predict that when the industrial economies around the worldstart crashing there will be a huge amount of reforestation that willhappen. So then we might have a mini ice age because of that and thenthat might run its course and something else will happen. The kind ofgoldilocks climate that has allowed human populations to swell tobillions of individuals, that period of climatic history seems tohave ended already. We're in a different planet now; we're in adifferent world.p { margin-bottom: 0.08in; }