The Timing Of The Next Oil Price Spike

The world and its official global economy have reached the end of a crucial phase. The beginning of that phase was in 2005, when the world's growth economy first began to encounter the reality of constrained global oil supplies. In May 2005, the world's oil producers produced slightly over 74 million barrels of crude per day (or 85 million, if one counts natural gas liquids, “oil” from tar sands, biofuels, and other non-conventional sources). This was an all-time production record which was not exceeded for at least 2 ½ years, if one believes the production numbers of the International Energy Agency (IEA) and the United States Energy Information Administration (EIA). Some believe that the production numbers for 2008 were inflated, and that the May 2005 record is indeed an all-time record that has never been exceeded.

What is clear, however, is that global oil production stayed in a relatively flat band right around 85 million barrels per day from May 2005 until September 2008. Those who study Peak Oil have called this period the time of the “bumpy plateau,” where oil suppliers struggle to find enough new fields and start enough new projects to offset production declines in existing fields. We know we are past Peak and that the suppliers have lost the struggle when total daily world production begins to fall in spite of the best efforts of oil suppliers. At that point, the world has fallen off the bumpy plateau and is now on the downside of Hubbert's Peak. One of the signals that we are past Peak is an inexorable rise in the price of oil and petroleum products.

The 2007-2008 price spike may therefore have been such a signal. Oil climbed from around $65 per barrel to over $147 per barrel in a little over nine months. There were also spot shortages of petroleum products in various places, though this was not widely reported by the American media. Those who study Peak Oil devised a few theories to describe what they thought would happen as a result of the price spike due to Peak Oil. The consensus of many was that a sufficiently severe spike would derail the global economy, causing a recession and collapsing economic activity. This would also cause the price of oil to fluctuate wildly for a time before resuming its inexorable upward climb.

All these things have happened. The oil price spike of 2008 caused not just a global recession, but the beginnings of a depression potentially so severe that it may just end the official global economy. The price of oil has also crashed – from $147 per barrel to around $40 per barrel today. Of course, the fall in price is not due to finding new supplies (no one has found any large new, cheaply extracted supplies), but is due, rather, to falling economic activity. It now appears that the world has no more new supplies of cheap, easily-gotten oil.

So what happens next? Some analysts have stated that the price of oil will remain low until the world attempts an economic recovery. At that point, perhaps a few years into the future, global demand will run up against shrinking supply and there will be another price spike, followed by the return of a global recession or depression. But a report released in January of this year presents a different view – namely, that the coming price spike won't wait for an economic recovery, but that it will begin this year.

The report, titled, “Oil Prices: Another Spike Ahead,” was written by Jeff Rubin and Peter Buchanan, and is in the 23 January edition of StrategEcon, a publication of CIBC World Markets. (You can find it here: http://research.cibcwm.com/res/Eco/ArEcoMI.html. Click on the report titled, “Reflation.”) The report analyzes the effect of collapsed oil prices on new oil production projects, most of which require prices of well over $60 per barrel to be economical. Because the actual price of oil is so much lower than what is needed for oil producers to make money, many planned oil projects have been cancelled. The result is the removal of well over a million barrels per day of new production, and a decline in total world production from 85.8 million barrels per day in 2008 to 84.8 million barrels per day in 2010. The IEA has also stated that due to depletion of existing oilfields, the petroleum industry will have to spend well over half a trillion dollars each year just to meet future demand. This money is not likely to be spent in our present economic climate.

The CIBC report therefore predicts a supply shortfall of at least two million barrels per day by 2010, and a price spike that will begin in 2009 – indeed, within the next several months. By the end of 2010, the global price of oil will likely be back over $100 per barrel again. This will hinder, and may possibly derail, any attempt at a global economic recovery.

It appears, then, that we have fallen off the bumpy plateau. Or at least we don't have much longer to wait before we know for sure. All the words written on this blog and others concerning alternative systems and living lightly on the earth were not in vain. If anyone hasn't yet taken those words to heart, hopefully it's not too late.

Small-Scale Manufacturing - The Japanese Example, And A Few Last Comments

The issues now being faced by the members of our modern society are so serious that a proper discussion of these issues must include a healthy discussion of practical answers to practical problems. Mere theorizing or philosophizing won't do – although it certainly is entertaining sometimes. The search for practical examples has led me to study case histories of the use of small-scale manufacturing in various countries. Japan is one such country, and it was the subject of a report titled, The Japanese Experience In Technology, authored by Takeshi Hayashi of the United Nations University, and published in 1990. (The entire report can be found here: http://www.unu.edu/unupress/unupbooks/uu36je/uu36je00.htm#Contents.)

The Japanese Experience report shares a motivation and point of view typical of many reports written over the years on appropriate technology and small-scale industry deployment in the developing world. That point of view is the study of appropriate technology and small-scale industry in helping Third World nations achieve a higher level of “development,” i.e., similarity to modern First World society. In other words, the goal of such studies is to help devise strategies for “modernizing” these nations. Thus the citizens of these nations are judged according to how receptive they are to complex First World technology, how adaptible their indigenous small-scale technologies are to First World economic goals, and the ability of small-scale manufacturers in these countries to participate in and compete in a modern, interconnected, global economy. This First World bias is also seen in the way these studies judge indigenous small-scale enterprise according to the First World criterion of “efficiency” – maximum production with maximum profits and minimum cost per unit of production.

It is all but certain that we in the First World are facing a future of economic contraction, of simplification, of a return to a lower standard of living, due to economic collapse, resource shortages and environmental degradation. The studies mentioned above regarding small-scale industry might not therefore seem obviously useful in showing members of an advanced society the strategies and paths for preparing for the future we now face. Yet by reading between the lines and looking at the data in some unexpected ways, we can learn much.

First, the good news: According to the Japanese Experience report, small-scale industries assumed an increasingly prominent role in Japanese gross domestic product after the oil shocks of the 1970's. These oil shocks, along with increasing competition between producers, drove a number of large-scale factories out of business, and “...transformed the mass production system into a system producing high-quality goods in small quantities to meet market needs and to diversify risks.” Secondly, Japanese small-scale factories (with 20 or fewer workers) accounted for 87.3 percent of all Japanese factories in 1980. They employed 20.1 percent of all workers and contributed 12.6 percent of the total national output. Factories with fewer than 100 workers made up 98 percent of all Japanese factories, and employed 58 percent of all workers.

Small-scale industries in Japan also rapidly adopted modern urban industrial technology, aiding their competitiveness in international markets. Workers who mastered key components of an industrial process employed by a large manufacturer were in many cases able to go into business for themselves as subcontractors to their former employers, providing the materials or semi-finished goods produced by the process component they mastered. As the technical understanding of these workers increased and they were able to afford more complex technology, so the range of parts and base components that they could offer to larger manufacturers also increased.

In short, Japan had a long tradition of traditional, small-scale craft industry, which became the small-scale industrial foundation of Japan's 20^th Century modernization. Japanese small-scale manufacturing has been proven to be a most fitting means of providing desired goods to customers without overproduction and waste – a very important characteristic in an era like the one we are now facing, an era of scarce resources and high costs. Moreover, Japan retained its small-scale manufacturing tradition and culture until 1990 at the very least.

But now for the not-so-good news. Japan's culture of small-scale manufacturing has not been immune to the effects of globalism. The removal of trade barriers and the global spread of neoliberal economics has meant the outsourcing and shrinkage of Japan's manufacturing base. In much the same way that cities like Detroit are typical of American deindustrialization, Japanese cities that were manufacturing powerhouses are now shrinking, as noted in a paper titled, “City Shrinkage Issues In Japan” by Yasuyuki Fujii. (Source: http://www.mizuho-ir.co.jp/english/knowledge/shrinkage0405.html) And according to the 2009 online edition of the CIA World Factbook, only 27.9 percent of Japan's labor force works in industry at present.

Japan is thus losing a key component of self-sufficiency. As with other First World nations, the largest sector of the labor force is now the service sector. As the global economy continues to collapse, the value of the “service industry” will diminish in a very obvious way, and the demand for necessary, useful, “made-at-home” physical goods will rebound. Hopefully, the Japanese will have retained enough knowledge of their small-scale craft-industry tradition to revive that tradition when it becomes needed again.

And now for a few last comments on small-scale manufacturing and appropriate technology. I think it's fairly obvious to most people by now that the First World is facing a drastic change of lifestyle due to economic shrinkage and resource depletion. It's also becoming obvious to many that we can't “fix” the global economy so that it starts growing again, nor can we invent some technological fix that will enable us to enjoy lifestyles of continually increasing consumption. Small-scale industry and appropriate technology should be viewed as aids in adapting gracefully to a poorer future, and not as a means of escaping that future.

But there has been a great deal of talk in the blogosphere lately concerning the miniaturization of complex industrial processes. In an earlier post I mentioned the Fab@Home wiki (http://fabathome.org/), a site dedicated to development of desktop-sized computer-aided manufacturing devices (“fabs”) that can “print” 3-dimensional objects. These devices can be built from scratch for as little as $300, and there are those who say that such devices can be set up to reproduce themselves – even down to the level of reproducing the computer circuitry (CPU) that guides the workings of a fab. Alternatively, there are those (like this source: http://future.wikia.com/wiki/Desktop_Semiconductor_Foundry) who predict the development of desktop-sized semiconductor foundries as early as 2010. This is important, because of the major role that microelectronics plays in everyday life in our society. Those who talk of these things speak excitedly of how such devices will allow communities in First World cities to become resilient and self-reliant once again by manufacturing their own goods, and how this will aid us in our quest for an ever-rising standard of living, even as we face issues like declining resources.

I have a different view. I see an upcoming limit to human advancement in microelectronics, a limit dictated by declining energy supplies. For while it is true that final fabrication of highly complex, miniature integrated circuits can be shrunk to a process that fits on a desktop, it is also true that producing the blank silicon wafers that are the feedstock of such a fabrication still requires enormous amounts of energy. Silicon is derived from sand, which is silicon dioxide. The silicon and oxygen atoms in silicon dioxide are held together by very energetic bonds which require a lot of energy to break if one wants to obtain pure silicon. The first step therefore is to melt sand by heating to a temperature of over 3000 degrees F in the presence of carbon. Then the resulting silicon is refined further. Among the processes for this second-stage refining is the Siemens process, which requires heating silicon to a temperature of 2102 degrees F, although newer processes have been invented which run at lower temperature. Still, the refining of electronics-grade silicon is very energy-intensive.

If ready availability of complex microelectronic devices is an indicator of a society's level of technological advancement, I see a time in which our advancement will go into reverse. For as fossil-fuel availability declines, so will the energy available for manufacture of energy-intensive products such as ultrapure silicon. This means a decline of availability of devices that are controlled by complex microelectronics, such as...desktop fabs. Either such devices will become increasingly unavailable to the general public as time passes, or they will become rapidly more expensive, or both. A time may come in which only a select few have access to the latest and greatest computerized manufacturing technology. Those of us without access to the most advanced microelectronics will be forced to rely on our wits and our skills to make things of value.

But this is just my “two cents.” If any readers have alternative insights or arguments, feel free to comment.

Small Scale Manufacturing - Practical Resources

I had originally intended to discuss sources of practical knowledge in small-scale manufacturing at a later time. This week, however, I've been getting a lot of very good feedback from readers in the U.S. who are interested in small-scale manufacturing. Some of these people are even operating their own small-scale enterprises. So I thought I'd list the resources mentioned by these readers, in addition to listing a few other sources I have discovered.

First, there is the Open Source Machine site (http://opensourcemachine.org/), a source mentioned on another website by two posters who call themselves Fleam and Jokuhl. The Open Source Machine site is dedicated to providing potential manufacturers with small, easily-built manufacturing machines that can be made from recycled and reused parts. Plans for these machines are developed for free and published on the Web without copyright or royalty or intellectual property restrictions, so that anyone can use them. One of their projects is called the “MultiMachine,” described as “...a humanitarian, open-source machine tool project for developing countries.” The neat thing about the MultiMachine is that it provides many metalworking functions in one device that can easily be made from used vehicle engine parts. The Open Source Machine project site also has links to plans to build other machines, including plans to build an air compressor from scrap.

The Fab@Home wiki (http://fabathome.org/), contains information on buying or building desktop-sized“fabs” (computer-aided manufacturing devices) that can “print” 3-dimensional objects. Some of these fabs have been used for making watchbands, bicycle chainrings and sprockets, and bottles.

Then there is the Open Source Ecology Wiki (http://openfarmtech.org/), a site created by Marcin Jakubowski and others. Marcin has dedicated himself to advancing the field of open-source appropriate technology, and his wiki is a compilation of tools and knowledge useful to those who are trying to build safety nets to replace the present breaking economic arrangement. He also has a blog, http://openfarmtech.org/weblog/, and there is a podcast interview with him available at http://agroinnovations.com/component/option,com_mojo/Itemid,182/p,39/lang,es/.

There is also a site run by “Greg in MO,” who left a comment on my first post on this blog concerning small-scale manufacturing. He has a garage business which manufactures clothes drying racks and hand tools. He has some interesting insights on simplifying the manufacturing process so that it can be in essence, a “cottage industry.” His site is www.easydigging.com.

The Practical Action website (http://practicalaction.org) is hosted by the Practical Action group, “...a development charity with a difference,” which focuses first on development of local peoples in the Third World, then on matching appropriate technologies to their needs. They have a lot of technical information available for use, covering such topics as climate change adaptation, agriculture, construction, crop and food processing, manufacturing, information and communication, waste and recycling, and much more.

Village Earth (www.villageearth.org) is a “consortium for sustainable village-based development,” whose website also contains links to many appropriate technology resources, especially those related to small-scale industry. Payment is required to access some of their resources, however.

The AfriGadget site (www.afrigadget.com) is a blog which details the ways in which Africans are “...solving everyday problems with African ingenuity.” One post describes how an Ugandan woman made a homemade cell phone charger. Other features of this blog include its emphasis on “grassroots reporting” by Africans concerning African issues and African responses. These people are actually doing the things I detailed in an earlier post, “A Safety Net Of Alternative Systems – Citizen Media.” They also have posts on reuse of metals in the Kenyan ironworks industry, and the fabrication of hand tools.

Lastly, I would be remiss if I did not mention the work of bloggers Jeff Vail (www.jeffvail.net) and John Robb (http://globalguerrillas.typepad.com/), who examined the topic of small-scale manufacturing in great detail long before I did. (See http://www.jeffvail.net/2008/06/rhizome-platform-design.html by Jeff Vail and http://globalguerrillas.typepad.com/globalguerrillas/2008/09/resilient-com-1.html by John Robb.) Their particular focus is on the “fab” machines I mentioned above. My only concern with these machines and others is that new, ready-made machines of this type may be out of the price range of many Americans, who would be forced to build such machines from scrap and used parts if they wanted to manufacture things as these machines do – as 3-dimensional “prints”. I think, however, that I may have a solution to that concern, as follows:

There are plenty of old computers that are not being used anymore because constant “innovations” and “enhancements” to the proprietary products made by major commercial software vendors requires constant changes to the hardware people use. These “enhancements” rapidly render older machines obsolete. However, these old computers can be put back to use for a wide range of applications, if they are run using a Linux or open-source Unix operating system. They can also be programmed with open-source software to function as the controllers in a computer-aided manufacturing process. There are also old appliances being discarded even though they have perfectly good single-phase motors. The relays needed to operate such motors could be scavenged from old relay panels used with legacy programmable logic controllers that are replaced with new models in industrial plants. An enterprising tinker with a knack in computer programming and systems integration could make his own “fab” from an old computer and the motors from such things as a refrigerator, a house fan, a blow-dryer, etc. As long as the parts made by such a fab were not critical to life and limb (no cardiac stents or jet aircraft parts, for instance), the things made by such a fab would probably be perfectly adequate.

Of course, there would be the need for machine interlocks and kill switches to make the fab safe. This would not only be to meet codes and OSHA requirements, but to prevent the very real possibility of losing body parts in the works of the fab. An understanding of good machine safeguarding principles would therefore be essential. But it might be possible for someone to construct their own homemade fab for less than $1000.

Oil - The Forgotten Star Of The Show

This blog began with oil – its role in the global economy and social order, and the implications of an impending peak and subsequent decline in worldwide oil production. However, the effects of globally constrained oil supplies have upstaged Peak Oil itself in the public consciousness of the First World. Our ongoing, accelerating economic collapse is certainly not boring, is it?

Yet Peak Oil hasn't gone away, and there is new evidence that the world is past peak. For instance, according to the Barents Observer, Russian oil production decreased last year for the first time in 10 years, suggesting that Russia has indeed passed its own peak production. Russia has recently become the world's foremost producer of oil, passing even Saudi Arabia. The reality that Russia is past peak means that there are only three major nations who are supposedly still able to increase production: Saudi Arabia, Kuwait and Iraq. It is a well-known fact that these three nations vastly inflated their reserves estimates during the 1980's without providing any proof for their inflated reserve figures. Therefore, they may in fact be unable to raise their production of oil. Also, Merrill Lynch recently issued a statement that in their estimation, non-OPEC production may have already peaked. (Sources: http://www.barentsobserver.com/russian-oil-production-down.4542842-16178.html, http://www.marketrap.com/article/view_article/9147/peak-oil-production-in-russia-suggests-worldwide-supplies-on-the-brink, http://www.forbes.com/feeds/afx/2009/02/03/afx6002345.html)

Against this backdrop, some members of the U.S. Congress are doing some very strange things. For instance, the Senate killed a budget amendment to the Obama stimulus that would have increased general transportation spending by $25 billion and mass transit spending by $5 billion. In its place, an amendment will be introduced by Senators Barbara Boxer and James Inhofe to give $50 billion to highways alone. Then there's the Senate approval of a budget amendment introduced by Democratic Senator Barbara Mikulski that would allow consumers who buy new cars to get a tax rebate on their auto loans. (Source: http://thetransportpolitic.wordpress.com/2009/02/03/disaster-in-the-senate/) This is very strange – and very stupid. Our government is making some extremely short-sighted choices in order to prop up an unsustainable, collapsing system for just a little longer.

There is one other item of rather bizarre news. Fortune Magazine recently published a short piece titled, “A Recession of Biblical Proportions,” in which the writer asserted that present and recent consumer behavior is running contrary to the Biblical pattern seen in Genesis, when Egypt enjoyed seven years of plenty, saving during those years, then endured seven years of famine in which the nation lived off its savings. (The article is here: http://money.cnn.com/2009/02/02/news/economy/colvin_depression.fortune/index.htm?postversion=2009020210) The article is really a very thinly-disguised plea to consumers to go out and start spending again, and it ends with the following warning: “Whatever happens, don't expect miracles. Spending and saving behavior evolves slowly, and our current mess is in some ways the culmination of a long journey. We may not suddenly start behaving with biblical wisdom. But at least let's try not to forget how bad things can be when we get spending and saving backward.”

Now I am a Christian, and I have read the Bible a number of times, and I can tell you that I see nothing un-Biblical about the behavior of most American consumers who have stopped spending because their backs are against the wall, because those who sold them things did so in order to rob and enslave them, because they are beginning to see the evils of consumer culture, and because they are discovering that they really don't need all the mass-produced junk that's being pushed on them by the overlords of our global economy. But it is somewhat amusing that the writers of Fortune Magazine (and the masters who own them) are trying to use the Bible to get me to go out and spend money that would be better used in helping me adapt to a breaking system.

I'd like to quote a few passages from the Good Book to the writers and editors at Fortune: “For the love of money is a root of all kinds of evil,” (1 Timothy 6:10); “Again I tell you, it is easier for a camel to go through a needle's eye than for a rich man to enter into the Kingdom of God,” (Matthew 19:24); and of course, the passage in Luke 16 about Lazarus and the rich man, which I will leave for the writers at Fortune to read for themselves. One day they will find out just how flammable their money is.

Thoughts On Not Needing The Money

The ongoing collapse of our global, “official” economy means that increasing numbers of us are going to be cut off from our present livelihood, just as many of us have already been cut off. According to a recent Washington Post article, some economists are saying that the U.S. economy shrank by 6 percent during the last quarter of 2008. (Source: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/29/AR2009012902248.html) Those of us who still have jobs and rely on them should have a plan for restructuring our lives so that we can survive without a job (or at least the jobs we now have). Now I can hear some readers saying “Duh! You should have started thinking about such things long before now!” Let me assure such people that I have indeed been thinking about such things for the last several months, though I am nowhere near as prepared as I'd like to be.

But I've also been reading blogs and other writings from others who are thinking of how to survive and thrive without a job. It's natural for many minds to gravitate toward this subject, when one considers that most workers are debt slaves, which leads to becoming wage slaves of corporations. Because these corporate masters put the profit motive above all else, most employees find themselves under some form of constant daily stress from antagonistic or uncomfortable elements of their day-to-day work environment. This stress gives rise to the oft-expressed wish to break away from corporate slave-drivers, yet the debt load carried by many workers prevents them from doing so, and indeed keeps them in a constant state of terror over the prospect of losing their jobs.

As I just said, the stress and fear of debt/wage slavery is fertile ground for thoughts of escape. These thoughts are sometimes expressed in songs, like “Big Boss Man,” “Maggie's Farm,” “Five O'Clock World,” and “A Hard Day's Night,” from the 1960's, or Paul McCartney's “I've Had Enough!” from a later time. But they are also expressed in plans, and the plans all seem to run along one particular track, as follows: One day an employee faces the implications of the fact that most of his “possessions” are only his to enjoy on credit, and that his employer knows that he “needs the money,” and is therefore likely to submit to any conditions imposed on him. The employee naturally does not like this, and longs for escape. To him, escape means “financial security,” which in turn means having all that he could ever need or want without ever again having to worry about how to pay for it.

Those who advise such an employee regarding financial security tell him that the road to that security consists of getting as much money as he can, maximizing his claim on the official economy as much as possible, in order to claim as much as possible of the resources produced by that economy. So our employee may embark on strategies suggested by the media, who hold up examples of people who got rich quick by doing nothing more than showing up on a TV game show, or who struck it rich as singers, cartoonists (like Scott Adams, creator of Dilbert), or freelance writers. Or he may go out every week and buy Lotto or Powerball tickets from 7-11 or Plaid Pantry or Circle K. Or he might try to generate secondary income streams by trying to make money from the Internet, as in starting a “financial planning” website and marketing his own advice. Goodness gracious, he might even take up “frugality,” with the goal of putting aside a little money every week for the purpose of “reinvesting” it in some supposedly wealth-producing part of the economy.

But if the global, official economy is in fact collapsing, and if this collapse is due to the appearance of fundamental, structural ecologic, environmental and resource limits to growth, then such a strategy is profoundly wrong. If the economy is collapsing for the reasons I just stated, then trying to achieve “financial security” by maximizing one's claim on that economy through getting lots of money is as misguided as trying to buy a penthouse office in a skyscraper that is crashing to the ground.

Therefore when I think about learning to live without a job, I am not thinking about trying to become “independently wealthy” in the usual sense. This isn't about money. But it is about readjusting one's life so that one no longer depends on a breaking system. One thing that a person discovers in that readjustment is that a man can't really escape the need to work. As the Good Book says, “If anyone will not work, neither let him eat,” and, “...that you make it your ambition to lead a quiet life, and to do your own business, and to work with your own hands...” There is also this: “Let our people also learn to maintain good works (more literally, “honest occupations”) for necessary uses, that they may not be unfruitful.” (Titus 3:14 and other Scriptures, World English Bible.) Work has formative and redemptive value, as long as it's not carried out under conditions of enslavement. But living without a job, as many jobs are currently defined, means being able to find your own work and reap the fruits of your own labor without having to rely on some huge corporate employer for these things.

If we are going to find our own work, many of us will need to develop entirely different skills – skills that are essential to life, rather than merely optional. In a deindustrializing, shrinking economy, most of us will find that we can live without personal life coaches, yoga teachers, baristas, auto detailers, financial consultants, plasma-screen TV salesmen and cable service providers, time management experts, and so forth. But if you can set broken bones, fix infected teeth, create a business that makes bicycle parts, build a rammed-earth house, design a safe (and it had better be safe!) sewage-recycling/composting system, teach basic academic subjects, make secondhand machinery from recycled parts, or do other vital or extremely useful things, you'll have a very large amount of work to do.

Where Does The 40 Percent Come From?

It is widely reported by several reputable sources that the United States contains five percent of the world's population, yet consumes 25 percent of the world's energy. According to the book Science And Technology in World History by McClellan and Dorn, in 1998 the U.S. consumed 40 percent of the world's oil, and in 2002, the U.S. consumed 25 percent of the world's electricity. And according to the book Globalization or Empire? by Jan Nederveen Pieterse, the U.S. spends 40 percent of the world's total military spending. If one digs a little, one can find statistics that show that the U.S. consumes a grossly disproportionate share of many of the world's resources. As a result, there are more cars than registered drivers in this country, there are more shopping malls than high schools, and 66.7 percent of Americans are overweight, with over half of these now being classified by the Centers for Disease Control and Prevention as obese. (Source: http://www.ukmedix.com/weight-loss/the_fat_are_getting_fatter_in_america4370.cfm)

We are a nation that is busy pigging out and chowing down the American way, with no guilt or qualms over our conspicuous consumption, yet few people ask, “Where does the 40 percent come from? Or where does the 25 percent come from? If we only comprise five percent of the world's population, how is it that we get to consume so much of the world's resources? How did we get our hands on them? And what is happening to the people in the rest of the world? What do they get to consume?”

These are hard questions of the sort that are not encouraged by the masters of empire, lest consciences should be awakened. If the questions are addressed at all, the wrong answers are given. But if most Americans knew the conditions and arrangements under which such generous helpings of the world's wealth were delivered to them, many of them would never again get a peaceful night's sleep – at least, not if they had consciences that were in any way functional. For the answers to those questions have everything to do with lies, conquests, murders, unjust military adventures, crooked contracts, exploitative trade treaties and the support of corrupt, stooge foreign governments whose leaders sell out their own citizens for profit. And the mainstream media in this country do not report on these things. Do you want to see how American excesses of consumption affect citizens of Third World countries? Do you want to see the conditions under which many of these people are forced to live? You won't find much coverage of these stories in papers like the Oregonian or Wall Street Journal or Orange County Register or USA Today.

Too many of us are like my mental picture of a child of the First World living at the turn of the 20^th century in a large house in Africa or India, a child with all the material possessions that money could buy, who looks out his window every day at the poor native children in the street without ever asking why those children are poor and unhappy. But as for me, I'd like to know where the 40 percent comes from, and how we get it.

And it looks like there are a few people who are willing to tell the answer to anyone who is willing to listen. I am thinking particularly of a few noteworthy moviemakers who have chronicled the rape of the Niger Delta in Africa by multinational oil companies. One of their projects is Poison Fire, a movie made by Lars Johansson and others. This movie details how multinational oil companies turned the Niger Delta into an environmental and ecological disaster in order to satisfy the First World's thirst for oil. You can find out more about it at http://www.poisonfire.org/.

There is also Sweet Crude (http://www.sweetcrudemovie.com/), a film directed by Sandy Cioffi, which also documents the human cost of oil extraction in Nigeria – a cost about which the American and European mainstream media are loudly silent.

Watch these movies – if you dare.

A Safety Net Of Alternative Systems - Small-Scale Manufacturing

The global, “official” economy of our modern society is breaking apart. The signs seem to indicate that the breakup is rapidly accelerating. Those who have been trained to rely wholly on that system are increasingly finding themselves in trouble, as the system is now increasingly unable to provide its two staple products – jobs (with income), and goods for consumption – to those who rely on it. Yet there is still a need for meaningful work in the making of the things necessary for everyday life. This post will introduce the role of small-scale manufacturing and industry in restoring our ability to take care of ourselves. This is an especially urgent topic for citizens of the United States, which allowed its manufacturing base to be decimated over the last few decades in the name of globalism.

The Breaking Supply Chain

The availability of goods to the typical “consumers” in industrial economies depends on a long and winding chain of supply. Over the years, the links of the chain have increasingly been held together by easy credit. Here is how it worked: business owners over the years stopped using their own savings to pay for the operation and expansion of their businesses. Instead, they took out loans to cover the costs of acquisition of new equipment, office/warehouse/industrial space, raw materials, vehicle fleets and so forth. The assumption was that they would make payments on their loans with the revenue generated by the use of the goods they bought on credit. For instance, a printing business might borrow money for paper, presses, computers, and related supplies, intending to pay the loan with some of the revenue generated by the use of these materials in the printing business.

This also extended to such things as farming, including large-scale agribusiness. Growers took out loans for seed, mechanized farm equipment and “inputs” such as fertilizer and pesticides, with the intention of making payments on those loans with some of the money received from harvesting and selling their products. And it extended to those who sold finished goods, who purchased these goods from suppliers by means of “letters of credit” issued by lending banks, and who planned to pay back these letters of credit through the commission they earned by selling the finished goods – goods such as textiles, machines, bulk cargoes, cars, tools, consumer electronics, and so on. In fact, the hugeness of the scale of economic activity for the last several years has been due to the easy and widespread availability of credit. The scale of economic activity would have been much smaller, if businesses in the official economy had been required to conduct their activities solely on the basis of their earnings and savings.

But the present economic crisis has put an end to easy credit, not only for individuals, but for businesses. Consumers, cut off from credit and hampered by stagnant wages, are not consuming anymore – at least, not like they used to. This is endangering all the other members of the supply chain, such as manufacturers who are no longer to make payments on the loans they received for their equipment, as well as retailers who bought the inventories of their stores on credit and find that they can no longer sell their merchandise like they used to. Farmers are curbing their planting due to lack of credit. Even shippers are hurting, since fewer people are hiring their ships, trucks and planes to send merchandise from producers to retailers. This is illustrated in a recent Times news article, “Commerce Becalmed Over Letters Of Credit (Source: http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5069065.ece).”

It is not an exaggeration to say that the supply chain is breaking. The links closest to the average consumer – the retail store chains – are the most obvious sign. Circuit City, Mervyn's, Linens 'N' Things, KB Toys and Sharper Image are some of the casualties. The United States has allowed itself to become a place where people get the things they need for daily life from stores which sell products made thousands of miles away. Few people here can make the things they need anymore. But now the stores are disappearing. Retailers can no longer secure the credit to buy things made thousands of miles away. Therefore, shipping traffic has almost evaporated. Many extractors of raw materials and manufacturers of finished goods are shutting down. Some analysts estimate that within the next year or two, many things that are taken for granted in the United States may no longer be readily available – either because they are not to be found in stores, or because there are no longer stores that sell these things, or because the foreign makers of these things are demanding a much steeper price for the things made. Some of these things are things that are useful and valuable in our transition to a low-energy future – things ranging from hand tools to bicycle parts.

The Revival Of Small-Scale Industry

It is quite probable that the United States is facing an impending cutoff of many foreign-made goods, due to the worsening credit crisis. This will not only involve such luxuries as consumer electronics, but very basic tools and means of transportation, as well as other necessities. How will we obtain these necessary tools in a deindustrialized nation, a nation whose natural resource base has been largely depleted?

I believe that the answer is twofold. First, we in this country will have to get used to the idea of living with less. Second, we will have to raise up local (or hyperlocal), small-scale industries and manufacturing in order to produce the basic, necessary things we will need. The types of small-scale industries will be quite varied, as the needs of citizens in each locality will be varied; yet there are certain characteristics which will be desirable in all small-scale industries, such as:

• The ability to produce finished goods from salvaged and recycled materials

• The ability to make things without exposing workers to health risks

• The ability to start business with limited financial capital and small (or no) loans

• The ability to make things without polluting the environs in which the industries are located

• The ability to make things using limited inputs of raw resources, energy, and technologically complex processes and machinery

It would be a mistake for anyone reading this to think of small-scale industries as the “next big business opportunity,” a way to cash in on a get-rich dream during an age of declining energy availability. Rather, as one Kenyan said during an interview on small-scale manufacturing, “Anyone who can be able to provide the basic necessities to his family ought to consider himself successful.” The goal is not profit maximization, but creating security for oneself, one's family, and one's community.

The Third World Pioneers

Much of the work done in starting, running, analyzing, and formulating policy regarding small-scale industries has been done by the citizens of the Third World, who for years have relied on these industries for a large portion of their gross domestic product. Several countries have created formal government ministries to promote and measure the progress of their indigenous small-scale enterprises. Among these are the government of India, which created the Ministry of Micro, Small and Medium Enterprises (formerly the Ministry of Agro and Rural Industries, and the Ministry of Small Scale Industries), and which has entered into agreements with several other countries, including Tunisia, Mexico, Rwanda, and Romania to further the development of small-scale enterprises. Small-scale industries have been extensively studied in Kenya, where researchers have suggested ways to integrate these industries symbiotically into the official Kenyan economy, providing the owners of small-scale enterprises with needed government favor and aid.

Small-scale industries in the Third World have arisen due to a combination of factors, including the existence of a long tradition of craft laborers who were present before the invasion of Third World cultures by the West, as well as the desire of many Westerners and some Third World citizens to “help” the Third World climb out of a supposedly backward existence into Western prosperity. Small-scale enterprises in the Third World have been hurt, however, by globalization, trade liberalization, and free-market policies forced on Third World governments by First World institutions. In addition, the large-scale industrialization of the Third World has been hampered by the exploitation of Third World energy and mineral resources by First World nations.

But now, as the availability of all sorts of natural resources worldwide peaks and begins to decline, the large-scale methods and technologies of the First World are becoming increasingly untenable, and the small-scale approach implemented by Third World citizens is becoming ever-more relevant. This small-scale approach may be the key to the United States quickly regaining its ability to provide basic tools and goods for itself. I shall examine the implementation of small-scale industries in specific countries in a later post.

Additional Sources:

Regarding Shipping:

• “Dryships Suspends Dividend, Dumps Expansion Plans,” Reuters, 22 January 2009, http://www.reuters.com/article/marketsNews/idINBNG42208020090122?rpc=44

• “Credit Tsunami Swamps Trade As Banks Curtail Loans,” Bloomberg, 31 October 2008, http://www.bloomberg.com/apps/news?pid=20601109&sid=aPA4NMYtDIS4&refer=home

• “Shipping Rates Hit Zero As Trade Sinks,” The Telegraph, 14 January 2009, http://www.telegraph.co.uk/finance/4229198/Shipping-rates-hit-zero-as-trade-sinks.html

Regarding Retail And Agriculture:

• “Circuit City Liquidation: 567 US Stores Closing,” The Huffington Post, 16 January 2009, http://www.huffingtonpost.com/2009/01/16/circuit-city-liquidation_n_158474.html

• “Wave of Bankruptcy Filings Expected From Retailers In Wake Of Holidays,” Wall Street Journal, 12 January 2009, http://online.wsj.com/article/SB123171955382272193.html?mod=googlenews_wsj

• “Farmers Concerned About Ag Credit Crunch,” WALB News, 14 January 2009, http://www.walb.com/Global/story.asp?S=9673928

Regarding Small-Scale Industries:

• Ministry of Micro, Small and Medium Enterprises, India - http://msme.gov.in/msme_intcoop.htm

• Memorandum of Understanding between India and Rwanda regarding Small-Scale Industries, http://msme.gov.in/MoU%20Rwanda.pdf

• “Small-Scale Manufacturing In Kenya: Characteristics, Problems and Sources of Finance,” K.R. Gray, W. Cooley, J. Lutabingwa, 1996, http://sbaer.uca.edu/Research/usasbe/1996/pdf/23.pdf

• “An Industrial Solution For Kenya and Africa,” Amollo Lorraine, Changing the Change Conference, 10-12 July 2008, http://www.changingthechange.org/abstracts/abs008.pdf

• “Why Small Scale Industries Deserve Attention,” Henry Muhanika, The Guardian, 24 August 2008, http://www.ippmedia.com/ipp/guardian/2008/08/24/121173.html