The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

The second major zone of oil production is the former Soviet space. While this region’s politics and geopolitics are, if anything, louder and messier and heftier than the Persian Gulf’s, the calculus of the region’s oil is far simpler.

Most of Russia’s oil fields are both old and extraordinarily remote from Russia’s customers. Fields in the North Caucasus are all but tapped out, those of Tatarstan and Bashkortostan are well past their peak, and even those in western Siberia have been showing signs of diminishing returns for more than a decade. With few exceptions, Russia’s newer discoveries are deeper, smaller, more technically challenging, and even farther from population centers. Russian output isn’t in danger of collapsing, but maintaining output will require more infrastructure, far higher up-front costs, and ongoing technical love and care to prevent steady output declines from becoming something far worse.

The Russians are no slouches when it comes to oil work, but they were out of circulation from 1940 through 2000. The techs involved came a long way in that time. Foreigners—most notably supermajor BP and services firms Halliburton and Schlumberger—are responsible for half(ish) of contemporary Russia’s output. Any broad-scale removal of Western firms from the mix would have catastrophic impacts upon oil production throughout the entire former Soviet space. The Ukraine War is stress-testing that theory.

Azerbaijani and Kazakh projects are far and away the world’s most technically exacting (think: Kashagan!). Aside from the handful of folks in the world’s supermajors who designed these...

Most Russian oil production is in the permafrost, and for most of the summer the permafrost is inaccessible because its top layer melts into a messy, horizon-spanning swamp. Tapping oil here requires waiting for the land to freeze, building dike roads across the wasteland, and drilling in the Siberian winter.

The third and final major source of global crude is within North America. A lot of oil output on the continent falls into the general category of legacy: in regions that have been producing for upwards of a century.

Mexicans are proving incapable at both keeping their old fields on life support and exploiting newer discoveries either on or offshore. Still, even with this glaring weakness, Mexico’s oil needs are roughly in balance. It

With a few years of experimentation, the collective American energy complex was able to crack the code on something we now call the “shale revolution.” In essence, shale operators drill down as per normal, but when they reach a petroleum-rich rock strata they take a sharp turn, drilling horizontally along the entire layer. Then they pump water and sand at high pressure into the formation. Since liquids do not compress, the rock cracks apart from within, freeing untold trillions of tiny pockets of oil and natural gas that would otherwise be far too small to harvest with conventional drilling. The sand suspended in the frack fluid props the cracks open, while the now-freed oil provides reverse pressure that pushes the water back up the pipe. Once the water has cleared, the oil continues flowing. Voilà! A shale well is born.

The shale revolution has changed the strategic math that underpins the global energy sector, and with it, globalization as a whole. Put very simply and very directly, both production and exports from both the Persian Gulf and the former Soviet space are dependent upon both America’s global security architecture and the ability of foreign technicians to access both regions. In contrast, production within North America is dependent upon neither.

While it is true that any of these restrictions could have happened under the Order, there are a few things to keep in mind:

First, the United States had a vested interest in maintaining global oil flows, both for its own economic well-being as well as for its broader strategic goals. Those concerns no longer apply and no other country has America’s technical energy acumen or military reach.

Second, producing oil is never free, and oftentimes it isn’t even cheap. Venezuelan oil production is so difficult that up-front investments amount to roughly $4,000 per barrel of long-term oil production. In the late Order of cheap capital, that’s eminently doable. In the constrained financial conditions of the Disorder, not so much.

Third, due to the concentration of supply, oil is the product that sails the farthest to reach its destination. The longer the sail, the more important it is to have a calm security environment.

Fourth, oil projects are not quick. A typical onshore project requires three to six years between first evaluation and first production. Offshore ...

INELASTICITY

Quick Economics 101 lesson. Under normal circumstances, prices are the result of the relationship between supply and demand. Should supply rise while demand remains constant, prices will drop. Similarly, should demand rise while supplies remain constant, prices will rise. The inverse for both statements is true as well. This concept is called price elasticity and it holds true for everything from skateboards to bread to potted plants to construction workers.*

Oil is different. Because oil is central to everything from the shingles on your roof to the phone in your hand to the spatula in your kitchen to the pipes and hoses in your plumbing to the diapers on your kid to the paint on your walls to your daily commute to how products cross the ocean, a slight increase in demand for oil or a slight decrea...

DISRUPTABILITY

All products travel the ocean, so all products face a degree of risk moving forward, but all products are not created equal. Whether you’re evaluating the supply chain of cut lumber or mixing bowls, pretty much everything has different sources and supply routes that can become active as the market dictates.

Oil is different. Since everyone has to have it, and since only a few places produce it in exportable volumes, the transport routes are far more concentrated. Even more problematic,...

INSEPARABILITY

One of the many transformative impacts of the Order was the combining of the entire world into a single market. With few exceptions, products can flow from areas of high supply to high demand. For most products, this mellows any price shocks because there is typically extra stuff somewhere that can be used to pour fresh supply oil on troubled demand waters.

First are those proto-empires that are able to militarily command shipments out of specific nearby production areas. Such interjections will not typically be clean, easy, or welcomed by the oil producers, but they will happen nonetheless. The second set of exceptions involves the major powers who produce the crude they need internally and so can block exports with a few pen flicks or switch flips.

The easiest of these pockets to predict is the United States. Most conventional oil wells take years of work to bring online, but shale wells only need a few weeks. Expect any price spikes in the soon-to-be-sequestered American market to be easily ameliorated, with a fairly even-keeled price structure topping out at roughly $70 a barrel. (Canada will be brought along for the ride since all meaningful Canadian export infrastructure terminates on U.S. territory.)

A close second is Russia. While Russian civilian technological acumen has all but collapsed since the Cold War’s end, so too has Russian industrial capacity. The end result has freed up five million barrels of oil and around 10 billion cubic feet of natural gas for daily export. The Russians have never been slaves to modern capitalistic norms, and the future will be no exception. I have exceedingly high confidence that in time, Russian shortages in capital, labor, and technical command will erode away all of those exports.

Argentina is likely to experience an oil system not all that different from the United States.

France and Turkey also look fairly good. Both are proximate to regional energy producers—Algeria and Libya for France, Azerbaijan and Iraq for Turkey—as well as sporting the local technical skills required to make those oil patches work.

The United Kingdom, India, and Japan are up next. All need to venture out, but all have naval forces more or less right-sized to reach potential sources.

Outside of this short list of states, the picture darkens in every conceivable way. Without the supply redundancy and variety that has dominated the post-1945 world, any single shipment interruption spells immediate price explosions. Even worse, many of the world’s oil suppliers are not in what I’d call particularly stable areas.* Should a field become damaged—either by militancy, war, incompetency, or lack of maintenance—it doesn’t simply go offline, it goes offline for years.

The North Sea is Europe’s only significant remaining production zone, with the vast bulk of the output lying in the sea’s Norwegian sector. The Norwegians enjoy excellent relations with their cultural cousins in Sweden, Finland, and Denmark, as well as their primary maritime neighbor, the United Kingdom.

Algeria has been a major producer for decades, and its output has helped mitigate some of the pricing chaos the Persian Gulf so reliably creates. That’s not going to happen for much longer.

Libya will get messier because it is, well, Libya. Home to at least three major insurrections, in the middle of an ongoing civil war, it is a place my gut tells me to simply write off completely. But then

CLIMATE CHANGE

Second, no matter what happens politically or technologically, we are nowhere near being “done” with oil. The dominant environmental concern with all things oil has been about carbon dioxide emissions, but technologies, like the internal combustion engine, that burn oil products to produce those emissions are hardly the only things that use oil. Oil is also the base material for the bulk of the world’s petrochemical needs. That sector is not a rounding error.

greentech does not make a country immune to geopolitics. It just shifts the view. Climate, temperature, land cover, resource location, distance, and maritime choke points are hardly the only geopolitical factors. So too are latitude, elevation, humidity, temperature, surface angle, windspeed, wind reliability, solar radiation, and seasonal weather variation. Just as different geographic features impact deepwater navigation and industrialization differently or manufacturing and finance differently, so too do they impact greentech and conventional power generation differently.

Zones for which today’s greentech makes both environmental and economic sense comprise less than one-fifth of the land area of the populated continents, most of which is far removed from our major population centers.

Fourth, is the issue of density. I live in a rural area and my home sprawls accordingly. I’ve got a ten-kilowatt solar system, which covers the majority of my south- and west-facing roof lines and generates sufficient power for nearly all my needs.

Fossil fuels are so concentrated that they are literally “energy” in physical form. In contrast, all greentechs require space. Solar is the worst of the bunch: it is roughly one thousand times less dense than systems powered by more conventional means. Consider America’s Megalopolis, the line of densely packed cities from Boston in the north to the Greater DC area in the south. Collectively, the coastal cities of this line comprise roughly one-third of the American population on a tiny footprint. They also happen to be positioned on patches of land with very low solar and wind potential. The idea they could generate sufficient volumes of electricity locally is asinine. They need to import it. The closest zone with reasonably good solar potential (not “good,” “reasonably good”) is south-central Virginia.

Fifth, even if solar and wind were equivalent technologies to oil, natural gas, and coal in terms of reliability, decarbonizing the grid would remain a mammoth task. Currently, 38 percent of global power generation is carbon free, suggesting we’d “only” need to roughly triple the good slice to displace the bad. Wrong. Hydropower has already used all available appropriate geographies globally. Nuclear would first need a helluva PR campaign to sufficiently improve its image. If only solar and wind are doing the lifting, they would need a ninefold buildout to fully displace fossil fuels.

Sixth, even in the geographies where greentech works well, it is at best only a partial patch. Greentech only generates electricity. Wind and solar might theoretically be able to replace coal in some specific locations, but electricity of any type is not compatible with existing infrastructure and vehicles that use oil-derived liquid fuels.

Such a restriction naturally leads to discussion of electric vehicles as a wholesale replacement for those powere...

The entirety of the global electricity sector generates roughly as much power as liquid transport fuels. Run the math: switching all transport from internal combustion to electric would necessitate a doubling of humanity’s capacity to generate electricity. Again, hydro and nuclear couldn’t help, so that ninefold increase in solar and wind is now a twenty-fold increase. Nor are you even remotely done. You now need absolutely massive transmission capacity ...

In the case of Europe and China, those power lines have t...

From 2014, when the solar boom began, until 2020, solar has only increased to become 1.5 percent of total energy use.

Seventh, the practical aspects of a potential switchover are beyond Herculean, both in terms of technical challenges and cost, and I am not talking about the relatively simple task of installing enough solar panels and wind turbines to generate 43,000 terawatt-hours of electricity, roughly seventy times the total greentech buildout of 2010 through 2021.

Part of what makes the modern world work is on-demand electricity. This requires something called dispatchability: the idea that a power plant can ramp its power output up and down to match demand. Not only can wind and solar not do this; they are also intermittent. Power levels vary based on that most mercurial of forces: the weather.

Part of what makes dispatchability so attractive is that there are peaks and troughs in normal electricity demand. Specifically, in most locations peak electricity demand is between 6 p.m. and 10 p.m., with higher demand rates in the winter. However, peak solar supply is between 11 a.m. and 3 p.m., with higher supply profiles in the summer.

Unlike coal or natural gas, which can be prepositioned, the wind blows where the wind blows and the sun shines where the sun shines. Any greentech-generated electricity must then be wired to where it can be used. This is also not free, and often results in the doubling (or more) of the cost of the delivered power (the details vary massively based on where the power is coming from, where it will be consumed, the nature of the connecting infrastructure, what sort of political borders must be crossed, etc.). It’s no wonder fully 95 percent of humanity sources its electricity from power plants less than fifty miles away.

Addressing such issues requires a parallel power system. With the status of greentech technology in 2022, in most cases that parallel system is a boring, conventional system that runs on either natural gas or coal.

greentech today is so unreliable in most locations that those localities that do attempt greentech have no choice but to maintain a full conventional syste...