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http://www.theoildrum.com/node/7425

What's Behind Egypt's Problems?

Posted by Gail the Actuary on January 29, 2011 - 6:15pm
Topic: Economics/Finance
Tags: egypt, food subsidies, fuel subsidies, natural gas exports, oil exports [list all tags]

We have all been reading about Egypt in the newspapers, and wonder what is behind their problems. Let me offer a few insights.

At least part of Egypt's problem is the fact that in the past the government has threatened to reduce food subsidies. Now it is planning to hold food subsidies level and raise energy subsidies, but it is not clear that the dollar amount of subsidy will be enough. The government is taking steps to make food and energy affordable for most, but there is worry that the steps being taken will not be enough.

Egypt's Declining Financial Situation

There is a good reason why one might expect Egypt to start running into problems with energy and food subsidies. Its own financial situation is declining at the same time that the cost of food imports is soaring. If we look at a graph of Egyptian oil imports, exports, and consumption (using a graph from Energy Export Databrowser, which graphs BP Statistical Data), we find that Egypt's oil use has been rising rapidly, at the same time the amount extracted each year is declining.

Figure 1. Egypt's oil production, consumption, and exports

Starting about 2010 or 2011, Egypt will change from an oil exporting nation to an oil importing nation, if there are imports available on the world market. The catch is that Egypt isn't the only one with declining oil production–world oil production has been approximately flat since 2005, and the countries that produce the oil are using more and more of it themselves. The result is that there is less oil available for export, even as countries like Egypt need more.

The oil that Egypt exports provides funds for the subsidies that it offers, so reduced exports mean less funds are available for subsidies. Egypt has recently been able to ramp up natural gas exports, and these exports have allowed subsidies to remain in place.

Figure 2. Egypt's natural gas production, consumption, and exports

If a person looks closely at the green portion of the graph, natural gas exports have been fairly flat since 2005. It sounds like they can be expected to remain relatively flat, too, because according to the US Energy Information Administration:

Given increasing domestic demand, combined with popular pressures in recent years against LNG and gas export contracts (particularly with Israel), the oil minister declared in mid-2008 that no new gas export contracts would be made.

So Egypt is still getting some export revenue from hydrocarbons, (and just as importantly, tax revenue related to the export revenue), but the natural gas amount is likely close to flat, and the amount from oil exports has gone to zero. Egypt subsidizes both oil and natural gas sales internally, so it is likely that the government is not getting much revenue related to be portion that is used for internal consumption. In fact, it may very well be a net loser on the part that is used internally because of its subsidies–revenue on exports is supposed to make up the difference. If Egypt needs to actually purchase oil from abroad in the future, its expenses can be expected to go up significantly.

Other Budget Pressures

Based on information from the CIA World Fact Book, Egypt was already significantly overspending its revenue in 2009 (the last year available), with revenues of $46.82 billion and expenditures of $64.19 billion. For 2010, the Factbook reports government debt amounting to 80.5% of GDP, putting its debt level far above that of most other African and Arab nations.

If Egypt's oil production is down, follow-on industries like refining and chemical products are likely down as well, making it difficult to increase revenues from these sources, or to obtain additional taxes related to the spending of workers in these industries. The Suez Canal is one of Egypt's sources of revenues, but with world oil exports down, revenues from it are likely dropping as well.

Cutbacks in oil production and in Suez Canal transport can be expected to exacerbate unemployment problems. The Egyptian unemployment rate was listed at 9.7% in 2010 by the CIA World Factbook.

Egypt has a history of a fairly egalitarian approach to distribution of income. In 2001, the CIA Factbook lists its GINI coefficient as 34.4%, which is near that of the United Kingdom, and much better than, say, that of the US. But in recent years, the CIA Factbook says

Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth.

These economic reforms likely raised the income of some people, but not of everyone, creating a wider gap between the rich and poor. This may lie behind reports of concerns by the poor that they are falling farther behind economically. With the county's history of a more even income distribution and the recent rise in food prices, this rising income inequality may be becoming more of an issue.

Need for Food Imports

Egypt's population has been growing rapidly (estimated at 2% per year by the CIA World Fact Book – about 3.0 children per woman), but the population is concentrated in a narrow strip along the Nile River. (Graph from Population Databrowser.)

Figure 3. Egypt's population growth since 1950

As population grows, the amount of land needed for housing and businesses rises, and the amount of land for agriculture falls. So Egypt can produce less of its own food, as time goes on.

Egypt is reported to be the world's largest importer of wheat. In 2010, the oil minister stated that Egypt imports 40% of its food, and 60% of its wheat. The problem this year is that world wheat production is down (at least in part due to weather problems in Russia) so world exports are down:

Figure 4. World wheat production and world wheat exports from USDA

A longer term problem, though, is that world wheat production has not been growing to keep up with growing world population. Part of this lack of growth may be competition from biofuels. Part of the lack of growth also relates to the fact that the "green revolution" improvements (adding irrigation and fertilizer) are mostly behind us. While irrigation and fertilizer greatly improved production at the time of the change, gains in production since 1990 have been much smaller.

The cost of imported food, particularly wheat, has risen, partly because of the relatively smaller harvest, and partly because the cost of production and transport is rising because of rising oil prices. Figure 5 shows the close relationship food prices and oil prices. The Food Price Index used in this graph is the FAO's Food Price Index related to food for export; Brent oil prices are spot prices from the EIA.

Figure 5. World food price trend is similar to Brent oil price trend.

With oil prices higher now (because world production is close to flat, and as countries come out of recession, they want more), food prices of all types are higher as well. Oil is used directly in the production of grain and indirectly in storage and transit, so its cost becomes important.

The higher food prices contribute to the overall inflation problem that Egypt already had. In 2010, the CIA Factbook estimated the inflation rate to be 12.8%. Since wages don't always rise to match inflation rates, inflationary pressures have no doubt put more pressure on the government to increase subsidies, at a time it cannot really afford to do so.

Impact on the Rest of the World

Why does everyone else respond so strongly to Egypt's problems?

One reason is that other Arab countries are also feeling some of the same pressures. Food prices are rising everywhere. Many low income people spend in excess of 50% of their income for food, so a rise in food costs becomes a real issue. People have come to depend on oil and food subsidies. If they are taken away, or not raised sufficiently to compensate for the higher costs of imports, it is a real problem.

Oil prices seem to be affected as well. If the Suez Canal should be closed because of disruptions, it could affect oil transit, particularly to Europe. According to the EIA:

An estimated 1.0 million bbl/d of crude oil and refined petroleum products flowed northbound through the Suez Canal to the Mediterranean Sea in 2009, while 0.8 million bbl/d travelled southbound into the Red Sea.

The amounts being transported through the Suez canal are now likely down a little from these amounts in 2011, because of reduced imports/exports worldwide, but they are still substantial. Europe's oil imports are about 10 million barrels a day of oil, according to Energy Export Data Browser (using BP's data). If all of the amounts that flowed northbound went to Europe, they would amount to about 10% of Europe's imports, or about 7% of Europe's consumption. In fact, some of these exports go farther–in particular to the US, or to Canada, so the amount in question is probably lower than this relative to Europe's consumption, say 4% or 5%. But even a small shortfall is a problem, in a world that needs oil for transport, food production, heating, and many other uses.

The inability to send products southbound through the Suez Canal is likely to also be a problem. Part of what Europe does is refine oil, keep the products it needs, and send other products to customers elsewhere. The whole system is set up assuming close to "just-in-time" production and delivery. While there is some storage capability, after a few days or weeks the system is likely to start running into problems. Those in need of the refined products being sent southward through the Suez Canal will be facing a shortage, and Europe will have excess supply. Of course, it is possible to use longer shipping routes, but this uses more oil for shipping and takes longer, so is more expensive. There is also a time-delay when the new system is put in place.

All of these problems (relating to both north and south-bound oil traveling through the Suez) can be worked around, but there could be a period of disruption for a while, as supplies begin traveling a longer route.

Original at Our Finite World.

153 comments on What's Behind Egypt's Problems?

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robert wilson on January 29, 2011 - 6:55pm Permalink | Subthread | Comments top

I vaguely recall Aldous Huxley discussing Egypt's population potential and the Aswan Dam in Esquire Magazine a half century ago. Huxley wrote regularly for Esquire but I am unable to find the article.

http://countrystudies.us/egypt/55.htm

toilforoil on January 29, 2011 - 8:19pm Permalink | Subthread | Parent | Parent subthread | Comments top

I keep having all these flashbacks when I go looking for old stuff: wild, disorienting hallucinations, even.

I did manage to find a more contemporary quote which I think is pertinent:

Egypt
I don't know anything, have no expertise, haven't even ever looked at the economic situation. Hence, no posting. If there comes a point when I have something to say, I will.

http://krugman.blogs.nytimes.com/

toilforoil on January 30, 2011 - 8:38pm Permalink | Subthread | Parent | Parent subthread | Comments top

The Manila Parallel
I am not writing about Egypt for tomorrow's paper; I've done a bit of homework on the economy, but really don't feel that I have much to contribute — besides, other stuff is happening in the world, and someone should be writing about it.

That said, I'm a bit surprised not to see anyone drawing the parallel that has jumped out at me (maybe because I spent time in the Philippines in 1990 and 1991, working for UNDP): the People Power revolution in Manila in 1986. This has some of the same feeling: a dictator who's a long-time US client, a mass popular uprising that's more about the perceived corruption of the government than about any particular ideology; El Baradei seems to be playing something like the Corazon Aquino role.

Obviously the fact that this is taking place in the Middle East makes it a lot more fraught, but the script does seem similar.

The Philippine example may also serve as a useful model for what to expect if the revolution succeeds. The Philippines didn't turn into Sweden; there was still plenty of corruption, democracy remains imperfect, etc. — none of which changes the fact that getting rid of Marcos was a very good thing. Egypt won't turn into Sweden either, but maybe, just maybe, something good is about to happen.

http://krugman.blogs.nytimes.com/ January 30, 2011, 5:36 pm

iagreewithnick on January 29, 2011 - 7:07pm Permalink | Subthread | Comments top

It's a very interesting situation, that goes with saying, and that first graph is pretty damning.

But I'm not sure you can consider Egypt totally in isolation - there's definitely a common thread that seems to be running through the regime-run Arab states: the people of the nations have finally had enough of the oppression/repression.

Gail the Actuary on January 29, 2011 - 7:23pm Permalink | Subthread | Parent | Parent subthread | Comments top

It is easy to make oppression/ repression not look too bad, if a regime has plenty of oil money to throw around. Once it runs out, it is a problem though.

Egypt seems to have electricity for nearly 100% of its population, so it is doing well in some regards.

iagreewithnick on January 29, 2011 - 7:31pm Permalink | Subthread | Parent | Parent subthread | Comments top

Well, yes, I agree. If it had been a transparent democracy that fell into hard times then I'm sure there would also be protests but I think the government would have dissolved long before now and I'm not sure the resentment amongst the people would have been as great.

The rising food prices and unemployment have obviously accentuated the problems but this has been simmering for some time. Like you say, when the regime has enough money it can mask the problems either through fear or disillusion. The fall of Tunisia seems to have awoken the people of Egypt to the fact that it's their country and they can make a difference after all.

mididoctors on January 29, 2011 - 7:51pm Permalink | Subthread | Parent | Parent subthread | Comments top

What Gail is saying is "Why now"

the example of tunisa?

sure by why tunisa now?

the economy is in a state that rebellion seems to make sense in a cost benefit equation of your average arab?

and One main reason for this economic malaise?

lack of cheap energy? perhaps... I think so

iagreewithnick on January 29, 2011 - 7:58pm Permalink | Subthread | Parent | Parent subthread | Comments top

Sure, point taken - it does look like a lack of cheap energy from oil could be the catalyst needed to precipitate the revolutions.

spano on January 29, 2011 - 8:28pm Permalink | Subthread | Parent | Parent subthread | Comments top

yes it can be lack of cheap energy, but the fluctuation that start the actual change can come from anywhere. An internal situation or an external one. Another interesting point is whether it is possible to understand the level at which the fluctuations in 1) energy supply problems due to closing gap export 2) political instability 3) massive un-employement 4) hostile neighbourhood and more are such that the system is no more able to get back to the status quo. What about the presently "rich" super-consuming countries?
Where is their tipping point?

mididoctors on January 29, 2011 - 8:51pm Permalink | Subthread | Parent | Parent subthread | Comments top

there is a lot of noise in the analysis of anything like this.

what is fair to say [I think] is that energy/food metrics moved the population into the margins where other effects can come into play. What looks like a chance concatenation of events is often only of significance because it is acting around some harder underlying economic baseline conditions or a perceived change in economic conditions

Its hard to think of a revolutionary example that hasn't had some economic precursor.

phil harris on January 30, 2011 - 8:14am Permalink | Subthread | Parent | Parent subthread | Comments top

MidiD
I tend to agree. Particularities matter. But there is common background over much of N Africa, ME. Summed up by Rockman's comment on the balance of hope/aspiration and the despair of the cornered. (Was the same in revolutionary France 200 years ago perhaps?) The big picture though is daunting. I posted this over at Gail's blog before I realised Gail was on Oil Drum

Your [Gail's] analysis also of world grain and the old green revolution is spot on. Grain importing nations have an increasing problem.
Egypt is still rated as having a viable economy and even with a still steeply rising population (albeit entering the demographic transition) has managed to grow a significant middle class. See all those cars and flyover highways. However, they have a very large poor population. These people must subsist on staple foods, grain and lentils/beans, as they always have done . This may be good for their arteries, but they must get enough food. The overall import figure of 40% of food, a significant proportion being wheat, compares and contrasts interestingly with UK, where we import something like 60% of our food, but are about 80% self-sufficient in grain for direct human consumption. We have a smaller population, only 60M, and we remain much higher up the food chain, for now at least.
A looming issue across much of N Africa and ME that you did not mention is water. This compounds the region's agricultural issues.

Egypt has been under vicious political lockdown during the years when the economy could extract increasing utility from their own and global resources. But that political repression was part of the Middle East and North African background for strikes on the USA and the twin-towers, culminating in 2001. Small world. Which smallness seems to be a sub-text of your post.
Thank you Gail.

Merrill on January 30, 2011 - 11:01pm Permalink | Subthread | Parent | Parent subthread | Comments top

EGYPT: Fears of a food crisis after Russia's wheat export ban
August 8, 2010

Russia's decision to ban grain exports is fueling anxiety among Egyptians that an international wheat crisis could lead to massive food shortages in the Arab world's most populous country.

Egypt is the world's top wheat importer, annually buying 6 million to 7 million tons from the international market. About 50% of that comes from Russia. However, record high heat, accompanied by wildfire and drought, has forced Moscow to abandon its commitments on wheat exports in order to protect Russian needs. That means Egypt will not receive 540,000 tons of wheat that was scheduled for delivery by Sept. 10.
...
Egyptians' greatest fear is a possible increase in the price of subsidized wheat products, such as bread, which are heavily relied upon by millions of poor citizens. According to U.N. figures, one-fifth of Egypt's population of 80 million are living on less than $1 per day.

Russia's grain ban showcases Egypt's love of bread

"Subsidized bread is the most important thing the government gives to the people," said Egyptian economist Mohammed Abu Pasha of investment house EFG-Hermes. "It is a very basic and sensitive issue and the government had to act quickly to reassure people. It is not about elections, it's about possible social unrest."

Even the language here conveys how essential bread is. Egyptians alone in the Arab world call it "aish," Arabic for "life." It's one of the few affordable staples in the country -- costing the equivalent of $0.01 per round loaf.

absitively on January 30, 2011 - 11:34pm Permalink | Subthread | Parent | Parent subthread | Comments top

Yes. Water must be part of the agitation. It is plenty scary that the Nile flow no longer reaches the sea.

Jedi Welder on January 30, 2011 - 9:19am Permalink | Subthread | Parent | Parent subthread | Comments top

The standard surpressing regime is maintaining the pressure from unsatisfied citicens. If they don't balance that up, they will revolt. But adding pressure comes at a cost. Tunisa for example had 4 diffrent security police offices. So you invest money into supression, but you don't want to over do it; you need money to build palaces and statues and send your children to school in european countries as well. It is basicly a matter of balance.

In this case, daily life for the average egyptian worsened faster than the regime could react to, and the kettle was allowed to boil over.

enemy of state on January 30, 2011 - 12:07am Permalink | Subthread | Parent | Parent subthread | Comments top

The fall of Tunisia seems to have awoken the people of Egypt to the fact that it's their country and they can make a difference after all.

I think the real thing is not igniting the desire, but the Tunisian example shows that it might not be a futile excercise. In some sense we may be seeing a series of copycat revolutions.

tomswift on January 30, 2011 - 2:45am Permalink | Subthread | Parent | Parent subthread | Comments top

I think a quote from Decimus Junius Juvenalls back about 100 AD says it all:
"that the common people—rather than caring about their freedom—are only interested in "bread and circuses""
And now there is no bread.

eeyores enigma on January 29, 2011 - 9:15pm Permalink | Subthread | Parent | Parent subthread | Comments top

actually Idoagreewithnick

IMO what is happening is the world is sensing the waning influence of US empire.

If you don't think that the people of these countries understood, at least to some degree, that they were being repressed by a dysfunctional US backed dictatorial gov and exploited by the corporations that were empowered because of this condition then you have not communicated with anyone from those countries. I have and they knew/know.

This is life at the end of empire., get used to it because it is going to get real messy.

Leanan on January 29, 2011 - 9:44pm Permalink | Subthread | Parent | Parent subthread | Comments top

I don't think I buy that.

This has happened before. The Shah of Iran. Ferdinand Marcos. Baby Doc Duvalier.

I suppose you could argue that the US Empire has been waning since peak oil USA, ca. 1970...but that still doesn't explain "why now"? Why now, and not 30 years ago?

ROCKMAN on January 29, 2011 - 11:44pm Permalink | Subthread | Parent | Parent subthread | Comments top

I agree with you Leanan. We can go on forever about the causes of the discontentment. Pick a flavor or any combination. That's not the interesting part of the equation IMHO. For me the question why are they making a stand now (if this is actually a sustainable stand)? I think it's just the opposite of desperation…it's hope. Hope that a change might actually be possible. Nothing destroys the ability of any group to overcome difficulties than the belief that they can't succeed. In another life time I saw the very dark side of defeatism as well as amazing results when leadership was able to instill some level of hope. Even if the optimism wasn't fully supported by reality...not everyone gets ou alive. Few willingly sacrifice themselves in a hopeless effort. But give them some possbility of success and many will put it all on the line IMHO.

No way to prove it but my suspicion is that the success of tossing out the leadership in Tunisia has generated such hopes in other societies. OTOH if the uprising in Egypt is put down harshly and the body bags begin to stack up the globe may quiet down again. But if, against the odds IMHO, the citizens of Egypt take control we might see more local uprising around the globe. The poverty around the globe will remain and perhaps worsen. But without hope of success I expect most societies to just lay down and continue to wither away.

enemy of state on January 30, 2011 - 12:16am Permalink | Subthread | Parent | Parent subthread | Comments top

We can go on forever about the causes of the discontentment.

I really don't think the discontent is new. I can remember incidents like apartment building collapses, where Eqyptians express hatred for their government, which they feel is respnsible for their lack of opportunity. And are from maybe 15years back. What is new, is the sense, that mass popular action might be able to quickly overthrough the regime.

iagreewithnick on January 30, 2011 - 7:40am Permalink | Subthread | Parent | Parent subthread | Comments top

I think it's just the opposite of desperation…it's hope.

Well this is where it gets confusing for me. For surely, if the main cause was an energy crisis then the driver would be desperation, not hope?

I happen to agree - it very much seems like a hope driven revolution, not desperation. That's why I still think the main driver is rebellion against the oppressive regime, not mindless panic.

mididoctors on January 30, 2011 - 9:25am Permalink | Subthread | Parent | Parent subthread | Comments top

I think its unwise to get overly precious of a single term in a discussion like this which has a broad underlying conjecture such as energy/food costs.

It is very easy to get side tracked by some thinking on the mindset of an entire populations in what at the end of the day is cartoonish modeling of political aspirations

hope vs desperation... ? yeah maybe more one than the other or both oscillating? How do you model that or measure it?

WHT is going to hate this graphic but what the heck...

In the above scenario the complex array of discontents and motivational factors in favour of rebellion[copy catting etc] never manifests itself because things are just not that bad enough to warrant it

however here economic conditions have deteriated to an extent that when combined with a complex array of other factors triggers revolution

whatever pokes its head above the economic conditions as a coherent political demand will be perceived as a cause or reason for rebellion, and they usual are but these political demands do not exist in a vacuum... everybody dislikes their government even in democratic locales such as the USA or the EU but this doesn't transfer into mass protest until some sort of economic cost is endured.. which is why you see violent protests in greece or even student unrest in the UK, or the poll tax riots etc etc etc...

now before I get a new one ripped for this awful piece of pseudo scientific garbage I want people to understand its just a graphical representation of an abstract idea I find hard to articulate in any other manner.

jokuhl on January 30, 2011 - 9:27am Permalink | Subthread | Parent | Parent subthread | Comments top

'He's a great man, a WISE man..'

WebHubbleTelescope on January 30, 2011 - 11:19am Permalink | Subthread | Parent | Parent subthread | Comments top

That's a good take, a combination of (1) a variation in the underlying level of discontent and (2) a variation of the threshold for instability. I use that all the time in the modeling of failures.

Here is a figure that I use in my book:

Abstraction for the time dependence of a failure occurrence.

The arrows represent the variations in the rate at which forces act in breaking down a part and the red area to the left represents a variable threshold level. When both of these grow wildly, you end up with greater amount of failures.

Without doing the politics, I have heard one thing from a certain set of the analysts. The common thread between Tunisia and Egypt is that they do have somewhat of a growing middle-class and as in western countries, the government fears unrest in the middle class more than the lower-classes. They can control the lower class, but the middle class has knowledge and can unify, just like what happened in the USA during the 20th century. That could be just coincidence and some argue that this won't have impact (see http://www.ottawacitizen.com/news/Little+will+come+Egypt+middle+class+re...)

drillo on January 30, 2011 - 7:01pm Permalink | Subthread | Parent | Parent subthread | Comments top

WHT,
this is an interesting point. The idea of your paper "Failure is the complement of success" - which you refer to oil discoveries - goes surprisingly well in line with the history of national economies during periods of rapid growth - which in fact was a pretty "bumpy" ride: Especially the rapid industrialization in the 19th (and 20th) century lead to a rapid growth (of the overall GDP etc.), but also to a series of dramatic faliures: investment bubbles, crises, wars etc.
An example among many others is the Crash of 1873, which has a lot of paralels with the crash of 2008 (
http://srnels.people.wm.edu/articles/realGrtDepr.html )

So it might be interesting to check if your statistical method also applies to historical economy data.
Of course one should strive for avoiding these failures - just like avoiding dry oil wells. And I still hope that mankind will learn from the mistakes we are making now.

mididoctors on January 30, 2011 - 7:28pm Permalink | Subthread | Parent | Parent subthread | Comments top

god zooks! Psychohistory

WebHubbleTelescope on January 30, 2011 - 7:57pm Permalink | Subthread | Parent | Parent subthread | Comments top

I think it works better as an analogy than as a mechanism to fitting historical economic data.

FMagyar on January 30, 2011 - 10:09am Permalink | Subthread | Parent | Parent subthread | Comments top

Why now, and not 30 years ago?

For the same reason that a pot of water at one atmosphere of pressure only boils once it reaches exactly 212 degrees Fahrenheit and not a nanosecond before. In other words the conditions were met for this to happen and therefore it did.

And yes the US Empire has been waning for some time now but I don't think that in and of itself is the main cause of this rebellion. In a way both the waning of the Empire and the the unrest in Egypt are both symptoms of the underlying problems of economic growth and a population in overshoot coming up against real physical limits. As far as the big picture goes quibbling over a few years one way or the other and asking why now is really almost irrelevant. In other words the political causes for this revolution are deeply rooted in physics and thermodynamics and no matter who finds themselves in power after the coming transition they will face exactly the same underlying and probably unsolvable problems and will necessarily fail unless they start planting the seeds of a completely new paradigm. The old order is toast and anyone who tries to maintain BAU will find that it can't be maintained, certainly not by authoritarian means. Thermodynamics doesn't bow to dictators or anyone else for that matter.

clifman on January 30, 2011 - 11:12am Permalink | Subthread | Parent | Parent subthread | Comments top

+10! Well said, Fred.

the underlying problems of economic growth and a population in overshoot coming up against real physical limits. As far as the big picture goes quibbling over a few years one way or the other and asking why now is really almost irrelevant. In other words the political causes for this revolution are deeply rooted in physics and thermodynamics and no matter who finds themselves in power after the coming transition they will face exactly the same underlying and probably unsolvable problems [Greer and others call this our Predicament] and will necessarily fail unless they start planting the seeds of a completely new paradigm. The old order is toast and anyone who tries to maintain BAU will find that it can't be maintained, certainly not by authoritarian means. Thermodynamics doesn't bow to dictators or anyone else for that matter.

(emphasis added)

dohboi on January 31, 2011 - 1:39am Permalink | Subthread | Parent | Parent subthread | Comments top

The existence of Al Jazeera probably played a role, both in their coverage of other uprisings and in their non-pro-western (and non-pro-western-puppet-dictator) stance.

Saudi Arabia is busily shipping in wheat, I hear. They are worried that they will be next.

And if they are?

Consequences for global oil markets?

enemy of state on January 30, 2011 - 12:13am Permalink | Subthread | Parent | Parent subthread | Comments top

If you don't think that the people of these countries understood, at least to some degree, that they were being repressed by a dysfunctional US backed dictatorial gov and exploited by the corporations

I think this grosly overstates the influence the US had. No doubt we have helped these regimes, mainly by giving them lots of money, and no doubt they are under some obligation to us because of that. But, I really don't think US support is the primary prop for these regimes. Its more that when we have found them, we work out a way to exploit them for our own agenda.

yorkshire miner on January 30, 2011 - 10:15am Permalink | Subthread | Parent | Parent subthread | Comments top

Enemy of the State,

If you think that giving the Egyptian Government over 2 billion dollars a year exploitation let me know?

enemy of state on January 30, 2011 - 1:27pm Permalink | Subthread | Parent | Parent subthread | Comments top

Egyptian Government over 2 billion dollars a year exploitation let me know?

Thats not the point I was trying to make. Culpability is not the same as capability. Mainly that money is a bribe because our politics makes supporting Israel very important. And much of it comes back to the US military Industrial complex in the form of weapons sales. But, we are not calling the shots for the regime, I think our controls levers are more like pushing on strings. Actually the Eqyptian internal problems are not so different from our own, a small elite which is becoming increasingly international is gaining a too large and growing share of the wealth and power.

yorkshire miner on January 30, 2011 - 3:34pm Permalink | Subthread | Parent | Parent subthread | Comments top

Enemy of State,

On second thoughts I think you may be right. I certainly agree with you that Egyptian internal problems are not so different from you own, they certainly reflect the problems in Europe in the ability of the politicians inability to get to grips with it. Thank you

Alfred on January 30, 2011 - 12:27am Permalink | Subthread | Parent | Parent subthread | Comments top

I think this accent on the importance of oil really misses the point. The vast majority of Egyptians are too poor to own a vehicle and anyway the price of petrol is most heavily subsidised.

I was brought up in Cairo and I can say that I have been waiting for, hoping for, something like this for 50 years. Essentially, the game is up and the people who have controlled the people for so long through the TV and media have had their say. No one believes anything any more - just take a look at the The Palestine Papers: A fact-based play in one act and try to understand that the only people who are still being fooled by appearances are the Western public.

The average Egyptian 18 year-old knows far more about international politics and geography than his/her American counterpart. Believe me. Don't think that because they are so poor they must be stupid. It is their American-approved leadership that is stupid - Robert Fisk: Egypt: Death throes of a dictatorship

jokuhl on January 30, 2011 - 6:57am Permalink | Subthread | Parent | Parent subthread | Comments top

What worries me if the uprising succeeds, and Egypt moves towards democracy, is what the US and other big players are going to do to 'manage' the fledgling government. As with Haiti, getting 'US approval' of a new regime might be the worst thing that could happen to Egypt. Again.

(Did our State Department get privatized and fed into the Chamber of Commerce at some point?)

jokuhl on January 30, 2011 - 7:22am Permalink | Subthread | Parent | Parent subthread | Comments top

PS, I don't know if you heard otherwise,if you still have connections in Cairo, but Fisk said ..

"Those same demonstrators last night formed a massive circle around Freedom Square to pray, "Allah Alakbar" thundering into the night air over the city."

While I heard a little different detailing from Democracy Now!'s Sharif Abdel Kouddous, speaking also from the ground in Cairo.

There is a great sense of pride that this is a leaderless movement organized by the people. A genuine popular revolt. It was not organized by opposition movements, though they have now joined the protesters in Tahrir. The Muslim Brotherhood was out in full force today. At one point they began chanting "Allah Akbar" only to be drowned out by much louder chants of "Muslim, Christian, we are all Egyptian."

http://www.democracynow.org/blog/2011/1/29/live_from_the_egyptian_revolu...

Bob
( My name is also Rob't Fiske, oddly enough )

step back on January 30, 2011 - 8:03am Permalink | Subthread | Parent | Parent subthread | Comments top

"Allah Alakbar" thundering into the night air over the city."

One question to be begged is whether this is Iran 1979 all over again.

Or will it be the French Revolution?

What power groups will come rushing in to fill the vacuum?
How will that affect the global economy?

Egypt relies heavily on tourism.
This is not going to help that industry for any time soon.
America is no shape to help Egypt when America can't today even help itself.

Was it Indiana Jones who said, "I have a bad feeling about this"?

ROCKMAN on January 30, 2011 - 8:29am Permalink | Subthread | Parent | Parent subthread | Comments top

sb - I see it the same way. "Freedom" for the Egyptian people may have huge price tag. And much of the bill may not be paid for decades. Folks might imagine something akin to our American evolution but that great experiment led to some not so great times. Such the complete subjugation of the native population and civil war that cost the lives of over 600,000 combatants. Again another worn out saying still fits: freedom is not free. And sometimes not very pretty.

jokuhl on January 30, 2011 - 9:35am Permalink | Subthread | Parent | Parent subthread | Comments top

Coming out of a revolution, it helps if you have fertile soil, or some other natural resource to rebuild with.

I wonder if Egyptians could set up a bunch of Desert Solar Generators to pipe some watts up to Europe and Eastern Europe? Might be some fertile soil for that crop.. make them look like Pyramids and boingo!, you've got some new Tourist attractions, too! (I'd go for the coffee, but that's my Swedish blood talking..)

ROCKMAN on January 30, 2011 - 10:33am Permalink | Subthread | Parent | Parent subthread | Comments top

That's a very good point joker. Whatever the outcome should the people's revolt work it's difficult to imagine a very stable beginning. And that lack of stability will hinder any significant investments in infrastructure IMHO. That was one advantage of dealing with a dictator: keep him happy and your investment is relatively safe. If Egypt falls into a series of failed govts little investments will be made at a time when it will become very critical with the worsening effects of PO coming down the road.

A silly analogy for sure but fighting for control of the Egyptian govt today may be like figting for contol of the Titantic after it hit the berg. The Tunisian president ran out rather quickly. Perhaps he realized it was time to grab one of the last seats left in the lifeboat.

Jedi Welder on January 30, 2011 - 2:22pm Permalink | Subthread | Parent | Parent subthread | Comments top

I am drawing parallells to Haiti. The only nation to start as a slave revolution that suceeded. But they never managed to build a nation that generated wealth, and are now the poorest on the western hemisphere.

D3PO on January 30, 2011 - 2:58pm Permalink | Subthread | Parent | Parent subthread | Comments top

According to some accounts, Haiti was throughly punished from the start of their independence by the colonial powers for being disloyal and that perhaps had something to do with their never being able to manage a nation that generated wealth.

enemy of state on January 30, 2011 - 4:13pm Permalink | Subthread | Parent | Parent subthread | Comments top

Haiti was throughly punished from the start

That is true. And the US joined in the punishment, because of the danger a successful slave revolt posed to our own slave states.

Apuleius on January 30, 2011 - 9:23pm Permalink | Subthread | Parent | Parent subthread | Comments top

Haiti was made to pay France reparations for their liberty.

They didn't finish paying until 1947. Just another reason why nothing you might observe about Haiti can readily be applied to other countries. Haiti's special.

geek7 on January 30, 2011 - 10:38pm Permalink | Subthread | Parent | Parent subthread | Comments top

Egypt has quite a bit of water flowing in the Nile. And traditionally it had very fertile soil in the Nile valley. Elsewhere, not so much. But >90% of population lives in the Nile valley or the Nile delta. In recent times, they also have a lot of hydro-power from Aswan Dam. But the Dam has interrupted the muddy floods that maintained the fertile soil. It is a very different place than Arabia or Palestine, or Cairo, Illinois! Mostly, it's problem is 30 centuries of corrupt and foreign government.

landrew on January 30, 2011 - 11:02am Permalink | Subthread | Parent | Parent subthread | Comments top

Rockman, you seem to have fallen into the trap of many Americans. You are thinking like a protected isolated American. We spend 10% (average)of our wages on food. Egyptians, China, etc. spend upwards of 40% on food. Don't you think if 40% of YOUR spending increased by 30% you would grumble, talk to a friend, who talks to a friend, meet at the coffee house, meet in the street with like minded friends? You sound shocked that people of average means would feel hunger. This is happening the world over. When OUR COUNTRY, mashes 40% of our corn crop into ethanol at a subsidy cost of .58$ per gallon, you wonder why oh why would other countries be hungry? This isn't about freedom, this is about jobs and food! 10% unemployment+ 30% increase in food costs= REVOLUTION! Do these numbers look familiar? Where else do you see rising unemployment and raising food/energy costs? Did I hear you call for more cake?

ROCKMAN on January 30, 2011 - 2:19pm Permalink | Subthread | Parent | Parent subthread | Comments top

landrew - I'm going to guess that English is not your first language since your reply doesn't' seem to have any bearing on my post. Perhaps you just needed any lead in for your rant. I don't begrudge your rant...I suspect it has a valid basis. If you care to respond to any of the points I did make I'll be glad to reply.

BTW: I've spent time in some sh*tholes on this globe that make Egypt look not so bad. Try not to be so patronizing...you'll get more meaningful responses IMHO

WebHubbleTelescope on January 30, 2011 - 5:11pm Permalink | Subthread | Parent | Parent subthread | Comments top

landrew was writing here quite frequently during the BP spill time frame. As I recall, he has a hyperactive style.

Jedi Welder on January 30, 2011 - 9:30am Permalink | Subthread | Parent | Parent subthread | Comments top

Han Solo? Both?

jokuhl on January 30, 2011 - 9:58am Permalink | Subthread | Parent | Parent subthread | Comments top

I should know I can leave it to the Jedi to answer that one..
(Of course, by the end of the series, most of the major characters had said those words as well..)

Jedi Welder on January 30, 2011 - 2:27pm Permalink | Subthread | Parent | Parent subthread | Comments top

You wrote upthread you were swedish. Then follow the link in my bio.

jokuhl on January 30, 2011 - 4:03pm Permalink | Subthread | Parent | Parent subthread | Comments top

It seems they have cleared all the extraneous BIO info (or is the Bio separate from the 'User Page'?) .. I think they were changing the membership programming.

I'm Part Swedish, one Fourth. I hate to think how much Java I would be drinking if I was pure-blooded. But if I come over for a visit, would you teach me to weld? I am building a little 'Astromech Knockoff' Droid, and I'm running out of threats to keep him in line. He's called Bad Dog.

jokuhl on January 30, 2011 - 9:31am Permalink | Subthread | Parent | Parent subthread | Comments top

Close, it was Han Solo.

America could help itself by not endorsing the first set of willing strongmen who sign up to 'Handle' Egypt in the coming months. (See, Taliban, Al Quaeda, Sadaam Hussein, Shaw/Iran)

mididoctors on January 30, 2011 - 9:42am Permalink | Subthread | Parent | Parent subthread | Comments top

One question to be begged is whether this is Iran 1979 all over again.

Or will it be the French Revolution?

the parallels between the French revolution and the Iranian one are surprising... not least in that the revolutionary theories expressed by the revolutionaries on the street were in dreamt up in Paris and that the history of the revolution transforming into a dictatorship after a period of terror is also analogous.

in other words the revolution of 79 was more like the french revolution than not...IMHO!

yorkshire miner on January 30, 2011 - 10:27am Permalink | Subthread | Parent | Parent subthread | Comments top

It seems to me, having read a lot of History that all popular revolutions French Russian Chinese take your pick, have all morphed into totalitarian dictatorships over time. I will expect that if Mubarack is ousted that the same will happen in Egypt, only this time being a Muslim country it will morph into a theocratic fascist state on the lines of Iran and the Sudan.

CuriousCanuck on January 30, 2011 - 9:06pm Permalink | Subthread | Parent | Parent subthread | Comments top

I think that depends on the existence of civic institutions and education. Eastern Europe changed peacefully. In any other revolution, the regime was the only thing in existence, see Romania. Poland, Czechoslovakia, Hungary, Latvia, Lithuania, Estonia had some experience with democracy and had high functioning societies (based on cheap coal :-), so there was a natural replacement for the system. Romania, Yugoslavia, Haiti, Vietnam, 1789 France, 1917 Bolsheviks etc had vacuum. US Declaration of Independence - peaceful process - in part thanks to British civics!

Merrill on January 30, 2011 - 10:27pm Permalink | Subthread | Parent | Parent subthread | Comments top

Actually, the American Revolution was a pretty messy affair, lasting at least from the First Continental Congress in 1774 until the ratification of the Constitution in 1788. The national government was not entirely secured until the Whiskey Rebellion was defeated in 1794.

CuriousCanuck on January 31, 2011 - 12:23am Permalink | Subthread | Parent | Parent subthread | Comments top

Right. My (Kosciuszko and Pulaski tainted) perspective was that Revolution war was between newly created country and Britain.

But my point really was that the change from one rule to another (British to US here), as militarily complicated as it was, was from one complete, working entity, to another one, based on the civic order already existing in the colonies. The Declaration of Independence did not burn and slash the past, the newly formed country did not have to reinvent everything from scratch. E.g. There was already a working idea of democracy in the colonies in 1700s. Quick lookup about Jefferson and House of Burgesses. Idea of electing representatives has been around for 170 years already.

Leanan on January 30, 2011 - 10:46am Permalink | Subthread | Parent | Parent subthread | Comments top

Democracy is probably the best outcome we can hope for. As the talking heads on the Sunday talk shows are pointing out...the odds are against a good outcome. The Philippines turned out okay, but it's hard to think of other examples.

schoff on January 30, 2011 - 1:01pm Permalink | Subthread | Parent | Parent subthread | Comments top

south korea, south africa (so far so good)

jokuhl on January 30, 2011 - 4:13pm Permalink | Subthread | Parent | Parent subthread | Comments top

Hard to think that any examples would suffice at this point.. I think there are variables (the ones we are here for) that put all of this into fairly new terrain. The communications technology makes it especially hard to anticipate, as it can benefit the populace with relatively small amounts of power. (and that's not just Twitter or CellPhones.. I think Radios overall have opened avenues for coordinating the masses that don't have a historical precedent.. but that coin, too, has both sides.)

Then again, Ecclesiastes does say there's 'nothing new under the sun' .. but I still think it'll be hard to predict just what part of history this one is going to rhyme with.

Bob

FMagyar on January 30, 2011 - 11:51am Permalink | Subthread | Parent | Parent subthread | Comments top

I think this accent on the importance of oil really misses the point. The vast majority of Egyptians are too poor to own a vehicle and anyway the price of petrol is most heavily subsidised.

To focus on vehicles misses the point. No matter how poor the Egyptians might be whether or not they have a push cart or a pickup is irrelevant. Even the basic foods that the poor eat, ultimately depend on cheap energy, as we run out of that, they will still be squeezed just like everyone in the chain the only problem is the poor will drop off the end of the chain. That is the ultimate consequence of the contraction in access to cheap energy.

Again it goes back to basic thermodynamics. We are faced with physical limits. The whole economic and political ecosystem will be affected. It's a game of musical chairs, after every round there are fewer chairs, to some that means going from private cars to bicycles and public transportation to the poor it might mean starvation.

Oil is the single most important energy source for the entire interconnected global economy, to miss that point makes it impossible to understand how it affects everyone from the wealthy and politically empowered to the impoverished at the very end of the chain and makes it impossible to understand why any revolution that tries to maintain a growth based economy is doomed to political failure.

Unfortunately neither those in power nor those aspiring to a better life get it and everyone will continue to try to find ways to keep things going as they have by putting new people into the same system that has already failed. It is the underlying paradigm that must be tossed, there is no other way but a lot of people will probably die trying to maintain the status quo thinking that a change in regime will make a difference. It won't. New flies on the same old sh!t won't change how it smells...

enemy of state on January 30, 2011 - 1:31pm Permalink | Subthread | Parent | Parent subthread | Comments top

The average Egyptian 18 year-old knows far more about international politics and geography than his/her American counterpart. Believe me. Don't think that because they are so poor they must be stupid.

I have no trouble accepting that. The quality of the US media bread and circuses has most of our population too confused to see whats happening. Al Jazeera is a much better news service than anything commonly watched in the US. (Yes it is available here, but because of our Islamiphobia almost no-one watches it.)

mididoctors on January 29, 2011 - 7:46pm Permalink | Subthread | Comments top

I was wondering when this was going to be a topic.

The notion of economic trigger for revolution or protest ain't no biggy in my book. " let them eat cake" for all the revolutionary theory and political explantion its the economic circumstances that triggers people into "what have I to lose" mindset.

yes the crunch of 07 and declining EROEI of the worlds primary energy production is in the mix but it is also conflated many times over by local and regional issues.

Ireland and Egypt do have things in common.

dr_dr on January 29, 2011 - 8:26pm Permalink | Subthread | Comments top

The eia shows Egypt importing 100,000 bbl/day in 2009.

http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=EG

The trend is more or less in agreement with your excellent graph, but why the discrepancy?

-dr

Gail the Actuary on January 29, 2011 - 9:55pm Permalink | Subthread | Parent | Parent subthread | Comments top

The graph is an Energy Export Databrowser graph by Jon Callahan, based on BP Data. I think the graphs are really nice, so use them sometimes, instead of making my own. Jon is a reader, and has provided these free for everyone to use.

One thing a person learns when working with oil data is that there are several sources of data, and they are all a little different. Part of the difference is definitions (BP seems to include NGLs, but EIA doesn't), but there are other difference as well. There is no one source of data that is "the" correct source--you just have to live with little difference.

Matt on January 30, 2011 - 10:49am Permalink | Subthread | Parent | Parent subthread | Comments top

This post was absolutely necessary. We have the factors you mentioned converging.

I have done some more graphs using EIA data (International Energy Statistics) here:

http://www.crudeoilpeak.com/?page_id=2517

I am working on a more detailed post which will focus on subsidies and Westexas' export land model which he has quoted in a comment below.

clifman on January 30, 2011 - 11:52am Permalink | Subthread | Parent | Parent subthread | Comments top

Thx - Great graphs!

westexas on January 30, 2011 - 2:01pm Permalink | Subthread | Parent | Parent subthread | Comments top

As noted below, Egypt's observed 14 year net export decline rate (21.7%/year) was 14 times their observed production decline rate (1.6%/year). Consumption increased at 3%/year over the decline period.

However, even if they had showed no increase in consumption, their net exports would still be down by about 37% in 2009, relative to 1995, versus a 20% production decline.

KLR on January 30, 2011 - 9:13pm Permalink | Subthread | Parent | Parent subthread | Comments top

What exactly are they consuming? According to EIA for 2006 it broke down as follows:

Gasoline		11.66% Jet Fuel		4.35% Kerosene		0.54% Distillate		30.55% Resid			29.04% LPG			14.75% Other			9.11%

These out of 658.44 kb/d total. 2000-2006 YOY changes averaged:

Total			13.51 Gasoline		3.44 Jet Fuel		2.72 Kerosene		-2.65 Distillate		6.34 Resid			-2.27 LPG			8.11 Other			-0.18

They obtain electricity from three sources, here are percentages:

     Gas	     Oil	    Hydro	 1990	2006	1990	2006	1990	2006 39.60%	72.10%	36.90%	16.10%	23.50%	11.20%

The shift away from resid would be part of the move away from oil based power, perhaps also the increase in LPG. The World Bank data I obtained this from shows Egypt as the 25th largest power consumer in the world for 2006, at 115.4 billion kwh, up from 42.3 bkwh in 1990. The oil consumed for power would be ca. 82 kb/d.

Excellent article, Matt.

Heisenberg on January 29, 2011 - 8:42pm Permalink | Subthread | Comments top

What's Behind Egypt's Problems?

Too many people.

mididoctors on January 29, 2011 - 8:45pm Permalink | Subthread | Parent | Parent subthread | Comments top

Its a question on how fundamental an answer you want to look for as defined by a contextual framework..

Heisenberg on January 29, 2011 - 9:01pm Permalink | Subthread | Parent | Parent subthread | Comments top

It doesn't get any more fundamental than 'too many people'.

But, at least Egypt has its priorities straight on what to do with U.S. aid:

The Egyptian armed forces have about 1,000 American M1A1 Abrams tanks, which the United States allows to be built on Egyptian soil.

http://www.msnbc.msn.com/id/41329081/ns/world_news-mideastn_africa/

These will be instrumental in the quest to keep their people fed, I'm sure...

What are these for, to keep the Israelis from invading? The Sudanese? The Libyans? The Saudis? The Jordanians? The army of Chad?

As has been pointed out here before, the M-1 Abrams is a horrible fuel hog. I doubt Egypt has the fuel to send formations of Abrams very far in any direction.

What a waste.

Maybe they can be cut apart and the metal made into bicycles and farm implements and solar PV panel frames some day.

mididoctors on January 29, 2011 - 9:06pm Permalink | Subthread | Parent | Parent subthread | Comments top

I think the destiny of that metal as recycled goods is a dead cert in time.

heaving population

set to hit 100million by 2025 or so.

Jedi Welder on January 30, 2011 - 9:38am Permalink | Subthread | Parent | Parent subthread | Comments top

From Wikile^H^Hpedia

Notable features of the tank include the use of a powerful gas turbine engine (fueled with JP8 jet fuel), the adoption of sophisticated composite armor, and separate ammunition storage in a blow-out compartment for crew safety. With a weight of close to 68 short tons (almost 62 metric tons), it is one of the heaviest main battle tanks currently in service.

So they run on jet fuel, that was new to me. I guess the egyptians import that stuff. Armor plating is composite. A cheramic/metalic compound of clasified specifications that is very durable. I don't know how to recycle that. You couldn't cut it up with an acytelene torch. Plasma cuts everything ofcourse.

PVguy on January 30, 2011 - 12:49pm Permalink | Subthread | Parent | Parent subthread | Comments top

"Armor plating is composite. A cheramic/metalic compound of clasified specifications that is very durable. I don't know how to recycle that. "

Arc furnace. The ceramic will turn to slag, the metal will collect under it and be tapped out as usual. Much of the tank's mass is ordinary steel that will recycle fine. And the turbine is made of superalloys (high nickel and cobalt) that will be very valuable in a salvage economy.

Oh, the explosive that makes up the reactive armor will burn quietly unless subjected to a shock comparable to an anti-tank warhead impact. So don't panic about that either.

Euan Mearns on January 30, 2011 - 6:15pm Permalink | Subthread | Parent | Parent subthread | Comments top

Too may people - yes

Why now?

Egypt is in deep overshoot. Totally dependent upon foreign food imports and provision of foreign debt, at a time when the hands that feed are withering.

One of the most important allies of OECD in the Islamic world. I imagine Israel will be on high alert. The EU's highway of LNG flows through the Suez Canal.

I don't know all details but I get feeling that Mubarak's regime has done what it could to open Egypt to foreign investment in oil and gas and to tourism that is probably the country's main source of foreign income. Its really hard to see any successor regime doing better.

I see Hillary is calling for elections - how naive can you get?

tstreet on January 30, 2011 - 7:10pm Permalink | Subthread | Parent | Parent subthread | Comments top

When is the last time any American official in power talked about population control? The last administration encouraged it with its stand on abortion and birth control. Aid should include birth control and/or tied to it. The elite loves growth,however, and now it is time for payback. And there will be future paybacks as the grim reaper does quiet well with those in overshoot.

Hillary knows it is close to over for Mubarak. She is just trying to position the U.S. to have a chance at some influence over whatever regime follows this.

dohboi on January 31, 2011 - 1:50am Permalink | Subthread | Parent | Parent subthread | Comments top

"The last administration encouraged it with its stand on abortion and birth control"

If by "last" you meant the W admin, then presumably you meant DIS-couraged?

enemy of state on January 30, 2011 - 9:37pm Permalink | Subthread | Parent | Parent subthread | Comments top

see Hillary is calling for elections - how naive can you get?

I actually think that call is quite significant. It implies the state department thinks the likelihood that Mubarak is gonna go is pretty high. Calling for elections is a vote of no confidence in the regime, that would come back to hurt her if his regime survives. Sure, he isn't going to leave just because we ask for elections, but the fact that it indicates US intelligence thinks he will likely go should embolden the opposition and dishearten the regimes supporters.

pasttense on January 29, 2011 - 9:40pm Permalink | Subthread | Comments top

Here's another analysis:

The unrest in Egypt is the latest result of American oil dependency. Is this an absurd statement? Before you vent your disagreements in the comment section following the article, please let me explain.

http://seekingalpha.com/article/249496-u-s-energy-policy-is-responsible-...

tstreet on January 29, 2011 - 10:12pm Permalink | Subthread | Parent | Parent subthread | Comments top

This is an explanation of high commodity and oil prices but it still goes back to the same allegedly causal factors. The Egyptians, however, are focused on the cause of their unrest, Mubarak. Increasingly inequality may be a bigger factor than the price of food and oil, however. Another country with the exact same or even worse problems but with a popular government seeming to serve the needs of its people would lead to a different result.

Egypt is revolting because they are just now importing oil? Just wait until they are in as bad shape as the U.S.

In any event, as the article implies, the U.S. is a major contributor to misery throughout the world because of the huge costs involved in importing oil and the financial machinations taken to pay for it.

Frankly, it just may be that Egyptians are simply fed up and people are trying to make this way too complex. Occam's razor and all that. Mubarak is 83 years old and has been in power for decades, for Christ's sake. We get tired of our Presidents after about 6 months. I would be on the streets if I were in Egypt and was well off.

iagreewithnick on January 30, 2011 - 6:35am Permalink | Subthread | Parent | Parent subthread | Comments top

Mubarak is 83 years old and has been in power for decades, for Christ's sake. We get tired of our Presidents after about 6 months. I would be on the streets if I were in Egypt and was well off.

+1 Exactly.

hightrekker on January 29, 2011 - 10:29pm Permalink | Subthread | Comments top

The best next step is a 150,000 person US occupation of Egypt so we can write their constitution, figure out who their interim leader should be, and then spend 10 years training security forces.

Also mercenaries. Lots and lots of mercenaries.
--atrios

Merrill on January 29, 2011 - 10:55pm Permalink | Subthread | Comments top

The "North-South Conflict" between the developed countries of the "north", and the under-developed, overpopulated countries of the "south" has been recognized and studied since at least the '70s. This has been done mainly in Europe, which is more sensitive to the issues, given the breakup of European empires following WW II. In the case of Europe, the dividing line is the Mediterranean, which has also been a historical religous divide.

There was the "Brandt Commission", chaired by Willy Brandt, which issued reports in '80 and '83. Hardly anything meaningful has been done, since the US was preoccupied with the ending of the Cold War, establishing itself as the sole superpower, and then fighting the War on Terror. The notion of wealth transfers to the poor south was also not something the Reagan and Bush adminsistrations wanted to hear about, nor was population control politically palatable in the US.

So having kept the looming north-south conflict carefully swept under the rug, it may be a novel concept to many Americans. However, I doubt that Europeans are surprised.

louisc on January 29, 2011 - 11:00pm Permalink | Subthread | Comments top

On a side note:

The graphs from Mazmascience leave alot to be desired.
Having gone to their web site I found this:

Mazama Science is a consulting group that brings together a wide variety of experience in support of web-based access to scientific information. We believe the world will be a better place when scientific data and analyses are easily available through your browser and we are working hard to make that happen.

Laughable really.
They've clearly forgotten one of the first rules of graphic design. Namely:

Those suffering from red-green colour blindness cannot distinguish between colours in the green-red-yellow part of the spectrum. This can make reading maps, using the internet and selecting a matching shirt and tie impossible. The disorder affects about 8 per cent of Caucasian males, but fewer than 0.5 per cent of females.

http://www.timesonline.co.uk/tol/news/science/medicine/article6837392.ece

Gail the Actuary on January 29, 2011 - 11:45pm Permalink | Subthread | Parent | Parent subthread | Comments top

I have a son who is severely red-green color blind, so I understand the problem (and I must be a carrier). I notice Euan on the TOD staff is frequently asking for an explanation about colors, too. The next time I talk to Jon, I will mention the issue. I think it is really the import/ export graphs that are an issue, and you can figure them out, if you think about it. It is really a shame, because for the rest of us, red and green are really nice, contrasting colors.

jonathan.s.callahan on January 30, 2011 - 12:43pm Permalink | Subthread | Parent | Parent subthread | Comments top

The wikipedia page on color blindness has a good summary on colorblindness. About 1 in 12 have some sort of color deficiency: about 8% of men and 0.4% of women in the US. (Interestingly, Caucasians have a higher occurrence of red-green color blindness than Asians and Africans.) The most common, as mentioned above, is red-green color blindness.

One of the most common techniques used to make colors more accessible to those with red-green color blindness is to alter either the hue or intensity of the red and green so that they can be more easily distinguished from each other. From the wikipedia page:

Traffic light colors are confusing to some dichromats as there is insufficient apparent difference between the red/amber traffic lights, and that of sodium street lamps; also the green can be confused with a grubby white lamp. This is a risk factor on high-speed undulating roads where angular cues can't be used. British Rail color lamp signals use more easily identifiable colors: the red is really blood red, the amber is quite yellow and the green is a bluish color.

Altering the intensity of colors means that, even when they are rendered in gray scale, they can still be differentiated.

The colors used in the Energy Export databrowser apply both of these techniques in an attempt to make these graphics as accessible as possible to the color blind. I would be very intersted, Gail, if you could quiz your son and find out whether these graphics work for him or not. I can certainly tweak the colors a little more if need be.

The other thing to note is that colors are not really needed to interpret the graphic. Net exports always appear above the zero line and net imports always appear below. This graphical representation works quite well in black and white. Color is used primarily to draw your attention to what is important rather than differentiate elements that exist side-by-side. You can print the graphics out in grayscale to test this.

A useful tool for simulating color blindess is vischeck. At this site you can upload your image and have it re-rendered according to one of three different types of color blindness. The red and green used in the Energy Export databrowser graphics are distinguishable after re-rendering but not as "pretty" as the red and green that most of us see.

Any other constructive input that could help make the graphics more accessible is always appreciated.

Jon

JN2 on January 30, 2011 - 12:54pm Permalink | Subthread | Parent | Parent subthread | Comments top

Thanks again Jon for all your graphs: energy, minerals and now population. If you're short of things to do, a time series of GDP/capita would be nice :) Ping me if that appeals and I can help out...

John in Aberystwyth

jonathan.s.callahan on January 30, 2011 - 2:43pm Permalink | Subthread | Parent | Parent subthread | Comments top

John,

Thanks for the kudos.

Unfortunately, my current situation is: "Too many projects. Too little time!"

However, if you have any favorite datasets that do a responsible job of compiling international GDP data I'd be interested in them. I'm always collecting datasets to work on in the future. To be useful, these datasets should be downloadable in a single gulp. Writing processing code to work on large files or databases is not a problem. Pointing and clicking on a web page to get a hundred different files is.

Cheers,

Jon

Gail the Actuary on January 30, 2011 - 5:50pm Permalink | Subthread | Parent | Parent subthread | Comments top

Jon,

I asked my son, and he said the red is darker than the green, so he can tell them apart, even on something like the world map, with some countries being importers and some countries being exporters.

He said if you had tried to use multiple shades of red and multiple shade of green, that probably wouldn't have worked at all. But as long as "darker" and "lighter" works for distinguishing them, it is fine for him.

Gail

jonathan.s.callahan on January 30, 2011 - 8:04pm Permalink | Subthread | Parent | Parent subthread | Comments top

Gail,

I am very pleased to hear that these color choices work for him.

Thanks to you and your son for following up on this.

Jon

notanoilman on January 31, 2011 - 12:03am Permalink | Subthread | Parent | Parent subthread | Comments top

This may be of help

http://www.vischeck.com/vischeck/vischeckURL.php

NAOM

jonatan on January 29, 2011 - 11:53pm Permalink | Subthread | Comments top

Egypt's problems are very similar to those experienced by numerous countries confronted with a rapidly declining net energy curve.

The Occidental World is currently subsidizing Egypt (and several other states deemed to be of strategic importance) to the extend of several billion dollars per year but it cannot significantly increase the level of those subsidies without putting in peril its own now very fragile finances...

Hence, the Occidental World is likely to witness the accelerated destabilization of allied developing states, the fall of their currently favourable governments and the subsequent emergence of what can be considered as failed states that could be used by rivals as bases to project hostile power. Therefore, what can now be considered as a relatively safe and even touristic buffer zone might develop relatively rapidly into a border with chaos where hungry hordes would be directly pressing at the gates.

If things continue on the present trajectory, a threshold will likely be reached where needed strategic resources brought from abroad will be insufficient to provide enough strength to hold back the hungry and desperate hordes at the gates. This will not only involve the Occidental World but a number of other surviving geopolitical blocks, such as Russia and China.

These geopolitcal blocks could then implode one after the other (as critical specific thresholds are reached) unless they decide (may be through coordinated decisions) to take a number of preemptive actions to eliminate potential pressure sources. This is however easier said than done...

Heisenberg on January 30, 2011 - 12:46am Permalink | Subthread | Comments top

Interesting article from Foreign Policy comparing and contrasting the armed forces of Tunisia, Egypt, and Yemen:

http://www.foreignpolicy.com/articles/2011/01/28/just_whose_side_are_ara...

Then there is Egypt's military, which takes in about 260 times as much U.S. military aid [as Tunisia's armed forces - H] -- an incredible $1.3 billion annually. That money means that, in many ways, the armed forces rule Egypt, says analyst Daniel Brumberg at the U.S. Institute for Peace. Mubarak, himself a former Air Force commander, has deftly used American taxpayers' dollars to underpin not just the military but his entire government. Egyptian generals are a privileged elite, enjoying weekends and retirements in breezy villas by the sea. They make clear that they expect a say in who rules the Arab world's most populous country once Mubarak leaves the scene.

tstreet on January 30, 2011 - 7:14pm Permalink | Subthread | Parent | Parent subthread | Comments top

Aren't we spending a billion a week in Afghanistan? This $1.3 B to Egypt seems like chicken feed. It costs a million dollars a year for our soliders in Afghanistan. Sounds like we got a lot of bang for the buck for a stable Egypt. Anyway, finally Democracy may finally be starting its spread through the middle east. Although neocons need to be careful what they wish for.

westexas on January 30, 2011 - 12:50am Permalink | Subthread | Comments top

In 1995, Egypt was consuming 51% of their total petroleum liquids production. From 1995 to 2009, production fell at 1.6%/year, resulting in a simple percentage decline of 20% over a 14 year period. Over the same time frame, consumption rose at 3%/year, resulting in a simple percentage increase in consumption of 52% over the 14 year period. As a result, net exports fell at 21.7%/year from 1995 to 2009, a simple percentage decline of 95%.

This is a class example of "Net Export Math," as illustrated by the simple Export Land Model (ELM). Most energy analysts would just focus on the 20% decline in production, not realizing that the production decline plus a consumption increase resulted in a 95% decline in net exports.

majorian on January 30, 2011 - 1:59am Permalink | Subthread | Comments top

Egypt's problem isn't special; middle class youth unemployment is a worldwide problem(but especially bad in countries with large youth populations). They had a TV show on the desperate plight of millions of college graduates in China who are unemployed or are ridiculously underemployed ('the ant tribe').

Accelerating technological efficiency is destroying the economic need for and value of workers.

OTOH, business are rewarded with greater profit margins, which accentuates the social inequity.

We have to face the fact that employment is more important to society than profit.

Lowering the retirement age, reducing the workweek, reducing the number of women working and keeping vast numbers of young adults in the military or college longer would reduce the pressure.
It would be great if we could export the surplus humans to another continent per 19th century Europe (or another planet).

A surprising number of young workers seem to be in unpaid 'internships'.

Clearly we need to face up to the problem and collectively do something about it humanely.

Leiten on January 30, 2011 - 3:27am Permalink | Subthread | Parent | Parent subthread | Comments top

Very well said. Even if Peak Oil and climate change were not even real phenomenons, this fact would destabalize the world anyway. There are huge swathes of young people with nothing to do, including in the West.

Ireland and Spain have epidemic youth unemployment. Even a place like Sweden has like 30 % under-30 unemployment.

If you discount students who study because they want to study(and not hide from the job market) the number fall to about 25 %, which is still insanely high. And this is official gov't numbers. Imagine if an independent analyst would look at the data.

The same is true in the U.S.

The true rate of unemployment for all people is around 16-22 %(depending on what definition you use). Everyone who is not working for Big Business or Big Government agrees that it's far higher than the official 9.6 % or whatever it currently is.

On the current rules, when you stop looking for a job, you magically jump out of the index and are no longer tracked. Add to this people who are underemployed(want to work more but cannot find more work) and you get another picture. Creative accounting. But the political opposition says nothing because they know that they would use the same measures to hide the true (sorry) state of the U.S. economy

Peak Oil will increase this. In a sense, I think it will get okay. A lot of meaningless jobs, like 'design consultant', will go away. A lot of old jobs will come back, many more will get into farming and government administration.

A lot of lawyers will probably get the boot as only the best or the most specialized will stay on. Ditto for plenty of media people or random 'sociologists' who don't really do much with their lives.

Peak Oil will, I think, bring a purpose to many peoples lives who are now just lost in their petty lives without a clear understanding what is going on in the world and what they should do about it.

P.S. (As a non-native English speaker, I reserve the right to write surprisingly simple grammatical errors.) D.S.

Jedi Welder on January 30, 2011 - 9:48am Permalink | Subthread | Parent | Parent subthread | Comments top

Lowering the retirement age, reducing the workweek, reducing the number of women working and keeping vast numbers of young adults in the military or college longer would reduce the pressure.

Hang on now for a moment. Women who don't work, breed. We want to INCREASE the amount of working women, at least in fertile age. Or we get even more unemployed little miracles.

tstreet on January 30, 2011 - 11:36am Permalink | Subthread | Parent | Parent subthread | Comments top

In the U.S. much of the unemployed are in prison, so that helps. A lot of this is drug related so I guess that is another reason to not relax the drug laws. We also have a lot of violence involving semi automatic weapons. Maybe this is all meaningless but we have problems of inequality here that seem similar if not worse than Egypt.

One of the arguments for guns that it arms the populous against a repressive government, enabling revolution if necessary. Interesting that we just shoot each other hear while in Egypt they are having a revolution without guns. Perhaps that is all apropos of nothing, but maybe something to think about.

Frankly, if they had something similar in the U.S., I would not be on the streets as they would be too dangerous. The mixture of friendly and unfriendly fire would be too dangerous. Imagine the death toll if this were happening in the U.S. from all the guns. The number of dead in Egypt is rather small considering the numbers of people on the street.

Unemployment is feature of the U.S. and other economies. No one knows how to deal with this in the context of an unfettered capitalist system. Providing unemployment payments in the U.S. is even controversial as it is perceived to encourage unemployment or is considered socialistic. The situation will get much worse in the next two years.

Mark N on January 31, 2011 - 12:52am Permalink | Subthread | Parent | Parent subthread | Comments top

So what happens if the military starts shooting? I think unarmed revolution only works against certain regimes, for political reasons. History teaches me that unarmed people, who face armed foes, are usually treated as livestock.

Schrodinger1 on January 30, 2011 - 4:36am Permalink | Subthread | Comments top

Gail has touched on something which I think is really important and I think has not been discussed elsewhere. In a round about way, the US and in particular the Bush administration is to blame for the revolutions now sweeping the Arab world. One big reason for what is going on is rising food prices. This is a common theme of the demonstrators in Tunisia, Egypt and Jordan.

America's idiotic and immoral biofuels policy is directly to blame for this. Corn ethanol production has exploded in recent years, and it now consumes 35% of our corn harvest to produce 900kb/d of ethanol. The US ethanol industry consumes 13% of the entire global corn crop.

Not surprisingly, the price of corn has more than doubled over the past six years. This has helped increase the price of other grains and food in general. Were it not for our corn ethanol industry, we could triple our corn exports and bring much needed relief to a hungy world.

Our corn ethanol policy should be to discourage the conversion of corn to ethanol when food prices are high. Instead we subsidize it, starving people in the third world in order to produce fuel for our oversized trucks.

High food prices are helping to blow up our allies in the Arab world. If these revolutions spread to Saudi Arabia, then we will really reap the whirlwind from our idiotic ethanol subsidies.

Sadly, President Obama has been a strong supporter of these subsidies ever since he was Senator form Illinois.

Leiten on January 30, 2011 - 7:16am Permalink | Subthread | Parent | Parent subthread | Comments top

I think it's slightly, to understate it, simplistic to state that America's biofuels policy is 'directly to blame for this' (your words).

They haven't helped, of course, but many coutries in the Middle East have had plenty of time to prepare for what's coming, as well as we in the West. Very few countries have(Scandinavia is the exception, and now China has been preparing for quite some time too).

The fact is that Egypt is mostly desert and it cannot sustain 80 million people, most of them young(so there will be more natural population growth) as well as declining oil production on the domestic scale, and add to this it's young population want a Western lifestyle.

It's an impossible equation.

twinpeaks on January 30, 2011 - 10:25am Permalink | Subthread | Parent | Parent subthread | Comments top

"It's an impossible equation."

Exactly. And if you extend that analysis to our global civilization as a whole you get the same answer. Perhaps just a different timeline.

robert2734 on January 30, 2011 - 11:50am Permalink | Subthread | Parent | Parent subthread | Comments top

If we didn't turn our corn crop into truck fuel we'd feed it to cows.

Paul Nash on January 30, 2011 - 5:09pm Permalink | Subthread | Parent | Parent subthread | Comments top

America's idiotic and immoral biofuels policy is directly to blame for this.

I don't think this is really the case. The youths on the street in Cairo, calling for the removal of their 30 year long president, couldn't give a hoot about the US biofuel policy. They may be suffering from high food prices of imported wheat, but the population graph in Gail's key post shows why they have to import so much - that is their first problem.

Lot's of people like to accuse the US ethanol policy of causing problems all around the world by raising food prices, but really, is it the obligation of the US, or other food exporters like Australia, New Zealand, Argentina, etc, to feed the rest of the world?

Exporting food is something that countries do only when they have a surplus - the first duty for any government is to try to feed its own population. The fact that some countries like US and Brazil, are turning some produce into fuel doesn;t change the fact that other countries, like Eqypt, Zimbabwe, Haiti etc, have hopelessly mismanaged themselves.

And mismanagement (which I deem to include corruption/abuse/repression) is what leads to revolts - always.

Schrodinger1 on January 30, 2011 - 10:13pm Permalink | Subthread | Parent | Parent subthread | Comments top

I'd argue that high and rising food prices are a much more reliable creator of revolutions than 'mismanagment.' Look at where these protests are happening. It is in the poor parts of the Arab world, not the wealthy ones. In every case you will find that food prices are one of the reasons people are on the streets.

The US ethanol industry is large enough to have a major impact on world grain prices. One of the major uses of corn is animal feed, and wheat can be substituted for corn in feed when corn prices are high. Also, some farmers have a choice about which crop they grow. Some wheat farmers will switch to corn when corn prices are high.

The population situation in Egypt is what it is. That is not something America has any control over. There are other contributing factors which make Egypt combustible, but those have been present for a long time. Food prices, together with the global economic crisis, are the key reasons why this revolution is happening now.

Schrodinger1 on January 30, 2011 - 10:22pm Permalink | Subthread | Parent | Parent subthread | Comments top

Declining oil production in Egypt is important because it means they no longer have the cash to subsidize food.

schoff on January 30, 2011 - 11:33pm Permalink | Subthread | Parent | Parent subthread | Comments top

and the same with mexico shortly

Schrodinger1 on January 30, 2011 - 5:26am Permalink | Subthread | Comments top

Another issue that we should look at is the possibility that these revolutions will spread to Saudi Arabia. That is a doomday scenario for the US economy and for the Obama presidency.

I think that the chance of that happening is greater than people realize. Saudi Arabia, like Egypt is a country with many unhappy young people. There has been huge population growth there and jobs are hard to find. Like Tunisia, the ruling elite lives in great luxury and keeps much of the country's wealth for themselves.

The Saudi rulers are elderly men with health problems. The King of Saudi Arabia is currently in the US having surgery. His deputy also has health problems and spent most of last year in Morocco. If things start to go wrong, these are not the kind of people who can quickly come up with solutions to the problems. The order of sucession in Saudi is unclear and there are many people who will compete for power. This could undermine the regime's ability to respond to popular protest.

Thanks to the oil wealth, Saudis do live much better than Egyptians. However, there is still unhappiness about the rising cost of living. Unemployment is officially 10.7%, but some estimates claim 25% is the real number. Saudis who post on internet boards claim that most of the population dislikes the royal family.

In the past few days, there was protest in Jeddah which was sparked by the flooding of the city after a large rainstorm. Apparently the city doesn't have a proper drainage system. Protests against the government are very unusual in Saudi Arabia. I think there is a line of dominoes waiting to fall. The first one is Egypt, the next is Jordan, and beyond that is Saudi. Because of the oil wealth, the odds are against a revolution in Saudi Arabia. However, this is not a regime which is likely to respond effectively if things start to go wrong. Iranian oil production collapsed after the '79 revolution and never recovered.

jokuhl on January 30, 2011 - 7:37am Permalink | Subthread | Parent | Parent subthread | Comments top

I wonder what effect Mecca has on the inclination of the people in SA to rise up? Being at the heart of the Dar al Islam, the Islamic World, that would seem to keep a convenient pressure also on those people to not upset the Apple Cart, as it were.

Leiten on January 30, 2011 - 7:48am Permalink | Subthread | Parent | Parent subthread | Comments top

I agree to only some extent. Egypt is fairly close to Europe and has a diaspora which is connected to it's young population via the internet. Saudi Arabia, on the other hand, is isolated in the desert in the deep inner Arabia.

It's also a far more fundamentalist country. If the young are miserable there, it's more got to do with jobs and economic standards. I remain deeply skeptical of any 'democratic uprising' there. Perhaps they may be revolting at the current House of Saud(due to it's close links with the U.S.) but don't exactly expect any fair democratic regime to take hold. One fundamentalist will replace another.

Also, what you are seeing now is interesting. The decision to remove the police was not a victory by the people but an attempt to wreak chaos.

The army is doing nothing and the criminals have been released. There's also reports of plainclothes police joining the looting gangs.

The point is simple: fight back by covert measures and then come in, when people have had it with the looters, and claim: See! I told you so! Only I can maintain stability. This is what happens if you revolt.

Mubarak may still go but whoever gets in his place will be a Western puppet to a varying degree.

Some of them are certainly real looters but it would be naive to think that it's a conincidence that a lot of prisoners have been released by chance(and some have escaped on their own) or that the plainclothes police have stopped seeding inner division.

I doubt that this is the work of Mubarak. It has Western fingerprints all over it.
It's a clever strategy, far more efficient than mere brute force.
Mubarak is getting directions from his political masters, while they can claim that he needs to show restraint with the army and police, people don't pay attention with the looters.

Jedi Welder on January 30, 2011 - 9:57am Permalink | Subthread | Parent | Parent subthread | Comments top

What I wonder about is Yemen. I like to keep an eye on that nation, since it is one of the next in line to become a failed state. They are about to run completely out of water, oil revenues collapsing, the population exploading. Islamists growing very strong there. On the other side of the Red Sea you have Somalia, wich is no longer a nation but an area on the map.

Yemen is next to fall. What keeps them calm now is Cath, but that narcotic takes a lot of water to grow, so when they run out of water, they will wake up. What will they do then?

Yemen is the "Mexico of Saudi Arabia". KSA is doing bomb missions on rebels there every now and then. What will happen when the situation can no loger be maintained?

yorkshire miner on January 30, 2011 - 10:58am Permalink | Subthread | Parent | Parent subthread | Comments top

Jedi

don't forget the Saudis are building a fence to keep the Yeminies in. The KSA is very well aware of the problem.

Dragonfly41 on January 30, 2011 - 11:12am Permalink | Subthread | Parent | Parent subthread | Comments top

You notice that TPTB in KSA have come out strongly critical of the Egyptian protesters. They know how dangerous a revolutionary "spread" to KSA would be.

Jedi Welder on January 30, 2011 - 2:35pm Permalink | Subthread | Parent | Parent subthread | Comments top

Iran OTOH supports it. And we all know Iran and KSA are arch enemies.

But Israel is worried about this. They have pece with Egypt after all, and they only have true peace with them and the jordanians. Out of 5 neighbours. Someone should draw a map of this...

SNOMM on January 30, 2011 - 5:50am Permalink | Subthread | Comments top

Thank you for this brilliant analysis, Gail. Articles like this are the reason why I come back to the Oildrum every day now since years. Congratulations!

I read now about Egypt and also about Tunesia for a while in the mainstream media. Everywhere it is said that the people finally have enough of suppression and want freedom. Amnesty international is celebrating these days already as milestones on the way of human rights in these regions of the world. Nobody seems to ask the question why now and not las year or next year. There was no decicive event, no betrayed poll, no assasination of oppositions etc. (in fact, the desicive event is shown in the first graph in this article). Than I must read that the radical muslim brotherhood is among the people in Egypt that want democracy - however, radical muslims that want democracy, thats not adding up. In fact, without looking at the petrol, nothing is adding up.

All these "revolutions" are not a step to democracy or human rights, it is simply a reaction to the fact that there is less to distribute and more to pay. We are not on the way to global peace and happiness, the battle for food has just taken a new dimension (dozens of deads remind us, how desperate the situation has become. Definetely I have to suffer a lot in my life before I risk my life to change the situation). Of course it begins in the poor parts of the world, however Europe is a food importer also and we have heating problems in addition to food problems. It will be interesting to see, how the development will pursue in these parts of the world (and when I will start to risk my life, brrrr).

Collapse is the sequal to exponential growth (Odum).

-Snomm

perceptions_now on January 30, 2011 - 9:23am Permalink | Subthread | Comments top

I am reminded of this line -
Too Much, Too Little, Too Late!

Too Much - Population

Too Little - Resources for the Population, including Energy, Food & not enough disposable income for the stapples of life.

Too Late - The Politicians & TPTB, in trying to retain the Status Quo, have postponed Risk mitigation too long and unless Innovation/Technology pulls another miracle out of the magicians hat, it may be too late for the cavalry to charge to our rescue, as Debt and a Climate of fear mount.

ChrisCook on January 30, 2011 - 9:35am Permalink | Subthread | Comments top

Excellent article, Gail.

Three points

Firstly, relating to Figure 5, energy and all commodities on organised markets have more or less lost touch with underlying production and consumption, and have become more or less financialised through private (Index Funds; ETFs; ETC; ETPs) investment in/or leasing of physical stocks and public/State reserve stock holdings.

Secondly, re Egypt and Islam, there is an extremely cogent analysis by Haroon Moghul outlining Four Reasons why Egypt's Revolution is not Islamic with particular reference to, and contradistinction with, Iran.

In that context Iran is no more Islamic now than Russia was Communist under Gorbachev and Yeltsin.
What we are seeing there is a struggle between two conservative oligarchic factions - neither of them more than nominally Islamic - in respect of control of the oil and gas complex during the ongoing privatisation process. The June 2009 election was essentially a hostile take-over bid by one faction at which the last vestiges of theocracy disappeared.

But I digress.

Third, and last, you omitted perhaps the biggest issue of all, which is unequal distribution of land ownership, and an unsustainably high level of rent extraction (and wealth transfer) from a land-less urban and rural population crowded into a relatively small area of habitable land.

To conclude, I think that Egypt and the other Med states are qualitatively different from the oil-rich Gulf states, and Egypt at least is most likely to follow a Turkish pattern of a rigorous military secular State operating largely with the consent of a muslim population comfortable with its faith. As with Tunisia that consent will depend upon a fairer share of wealth, and in the case of Egypt, some kind of land reform, fiscal or otherwise, is now essential.

mididoctors on January 30, 2011 - 10:14am Permalink | Subthread | Parent | Parent subthread | Comments top

interesting comment about Iran there.

I am not overly concerned by an egyptian revolution as long as it resolved in the main by internal politics rather than becoming reliant on external intervention

its their country

Gail the Actuary on January 30, 2011 - 6:13pm Permalink | Subthread | Parent | Parent subthread | Comments top

Rent is an issue I didn't run across in my research. Where you have growing population, and little land, I can see it could especially be a problem.

If you have building ownership, and economic contraction, then you get the opposite issue--not enough buyers for the homes, and falling land prices.

almyatt on January 30, 2011 - 10:23am Permalink | Subthread | Comments top

This discussion has so far omitted an Egypt-specific issue.

The Nile Delta is home to 2/3 for Egypt's population and the source of 60% of Egypt's food. Most of the land is within one meter of sea level, with some portions actually below sea level. In the United States, flood control upstream has prevented floods and silt from reaching the Mississippi Delta for about a century, with the result that the delta is no longer being built up incrementally. In Egypt, since construction of the Aswan High Dam in the 1970s, the Nile Delta is also no longer flooding. In both river deltas, natural subsidence uncorrected by silt buildup means the land is sinking into the sea at least as fast as sea level is rising. The process is more advanced in the Mississippi Delta, so one can to some extent see the future of the Nile Delta by looking at Mississippi's present.

Long before direct flooding is an issue, salt water intrusion into the ground water is a problem. Periodic floods of fresh water from upstream used to flush out the salt. It also brought essential nutrients from upstream as part of the silt. Now the salt is not washed out and the natural fertilizer settles out upstream behind the Aswan Dam. Soil fertility in the Nile Delta has already taken a double hit from this. While the power output of 2.1 gigawatts from the dam - about half of Egypt's electricity - has been beneficial, the Nile Delta is as doomed as the Mississippi Delta so long as the dam stands.

Artificial fertilizers made from fossil fuels allow farming to continue for the time being. However, it's expensive for the farmers and supplies of fossil fuels, as everyone reading the Oil Drum is aware, are limited.

If the Egyptian people succeed in throwing out the current oppressive government, it may be possible for them to get a more equitable distribution of available resources, but there's no indication that fundamental problems will be resolved by a political power shift. Available resources - food, fuel and fresh water - will continue to shrink. One thing we are not going to see in this region (or in the world, for that matter) is stability.

Art Myatt

Gail the Actuary on January 30, 2011 - 6:16pm Permalink | Subthread | Parent | Parent subthread | Comments top

Thanks very much for those insights. Very helpful!

peakoilproof on January 30, 2011 - 11:17am Permalink | Subthread | Comments top

There's a Cornell professor, Kevin Morrison, who's done a lot of work on the "resource curse" and his basic findings were that the discovery of lots of resources doesn't necessarily produce a totalitarian regime, rather the revenues from natural resources only allow whatever regime that is in power to continue to stay in power.

It makes logical sense that as Egypt's resource revenues decline, political instability follows. We see the same in Mexico and a dozen other "post peak" countries.

Here's the list from his paper "Oil, non-tax revenue, and the redistributional foundations of regime stability" which shows the countries which are most dependent on "non-tax revenue" (and therefore, in the case of countries most dependent on oil for non-tax revenue, have the most to loose in political stability, post peak):

1 - Bahrain
2 - Butan
3 - Bolivia
4 - Burundi
5 - Congo, Rep.
6 - Egypt
7 - Ethiopia
8 - Greece
9 - Iran
10 - Israel
11 - Japan
12 - Mali
13 - Nepal
14 - Nicaragua
15 - Pakistan

If you're interested in reading his papers, the website is: http://falcon.arts.cornell.edu/kmm368/

enemy of state on January 30, 2011 - 2:07pm Permalink | Subthread | Parent | Parent subthread | Comments top

1 - Bahrain ...
15 - Pakistan

I just wanted to note they are in alphabetical order, so nothing else should ba taken from the numbers.

Doomer_Dan on January 30, 2011 - 1:46pm Permalink | Subthread | Comments top

Gail, this is just the sort of analysis I was hoping to see from TOD. Very nice.

One point I would like to make is that I think you should not gloss over the effects of US monetary policy on the inflation story. Yes, we do have food inflation due to supply problems and we do have energy inflation due to supply problems, but these problems are compounded by the excess liquidity in top tiers of the financial markets. Money pumped by the Fed into the financial systems is looking for somewhere to go, causing rampant speculation in commodities and increasing prices. Money looking for returns is spooked by the shakiness in the bond markets and commodities are generally seen as a "safe" place to make money in times of low supply.

In other words, the rich want to make more money off of the necessities needed by everyone, but this negatively affects the poor most of all.

The effects of the Fed's manipulation of the value of the dollar are hard to separate from the effects of the supply problems because they are inseparably intertwined in our economic system. It is a difficult subject to get a hold on, especially for those who like to use solid numbers grounded in reality for analysis, because the Fed is not about reality at all. It is about obfuscation and human desires and foibles. But we are in the middle of a hardly recognized economic war and we ignore it at our peril.

Charles Mackay on January 30, 2011 - 8:19pm Permalink | Subthread | Parent | Parent subthread | Comments top

No doubt that the Federal Reserve leads the pack in 'printing' up new money, but we should not overlook the inflationary policies of China, Japan, and the ECB - not to mention the IMF, which printed up and distributed $250 billion SDRs ($300 billion US) in late 2009 to all countries of the world.

Washington, DC
Monday, July 20, 2009

What is important to note is that there's two aspects to this allocation. On the one hand it is a very timely response to the short-term situation. This allocation is going to provide, unconditionally, significant amounts of liquidity to the countries that need it the most. Basically, of this $250 billion, $100 billion are going to go to emerging market and developing countries, of which $20 billion to low income countries alone. And for that group of countries, just to illustrate, this represents a 20 percent increase on average in their international reserves. So it is a very significant injection of liquidity that will allow them to smooth the need for adjustment, in some cases it would give room for expansionary policies, and in general it will help alleviate foreign exchange pressures where they had materialized.

http://www.imf.org/external/np/tr/2009/tr072009.htm

spring_tides on January 30, 2011 - 2:01pm Permalink | Subthread | Comments top

Seems to me that it is a crisis of mismanaged expectations, facilitated by contemporary communications media.

I recall, in 1994, when South Africa was freed from Apartheid rule, and the first free elections occurred, the ANC was telling voters they too could have all the good things they saw the white folks enjoying - a house, a car, nice clothes etc etc etc.

Sadly, of course, once the ANC came to power, and the houses, cars and nice clothes did not materialize for the disenfranchised, some turned to crime to take what they thought was rightfully theirs.

One has to be very careful raising aspirations that cannot be met - apparently the crisis started with college graduates unable to find a "suitable" job opportunity.

Seems like they have taken to adopting a more free-market economy over the last few years - sometimes the rise of free markets and the fall of the social safety net has the result of widening the wealth gap.

poobserv on January 30, 2011 - 3:36pm Permalink | Subthread | Parent | Parent subthread | Comments top

Leiten,
I think that you have hit the nail on the head. The real problem with the situation in Egypt is that it might spread from Algeria all of the way through to the Iraq/Iran border. I haven't seen a whole lot of pictures from Egypt that suggest the poor are out in force. They all show people adequately dressed and fed. The signs indicate a fair number are able to make signs in English (undoubtedly a second for third language for most Egyptians.)

The driving force seems to be a large nascent, young and frustrated middle class. Egypt shares this characteristic with much of the area from Algeria to Iran.

It is also clear that the military has so far maintained cohesiveness. They seem to have used their weapons to protect vial institutions, but have not shot into the crowds with massed fire. This situation is unstable. Eventually, the military will either have to gain control or lose it entirely.

I think that there is a crucial nexus between petroleum products in Egypt that has not been emphasized. Basically, wheat is pretty well useless without fuel to cook it. If a family is spending 40% of their budget on food and another 25% on cooking fuel and the prices of food and cooking fuel go up significantly because subsidies are withdrawn, a political explosion results. The subsidies on cooking fuel are crucial.

It will be interesting to see how this plays out.

drillo on January 30, 2011 - 7:19pm Permalink | Subthread | Parent | Parent subthread | Comments top

I don't know about cooking fuels in Egypt, but I know that this is quite an issue in India, where the poor not only uses wood but also kerosene for cooking (and lighting). The IEA has written a lot about it, and that the poor would get into trouble if the goverment would cut the subsidies of this basic sort of fuel.
As for Egypt, I might guess that many people also use electricity and natural gas for cooking instead of oil or kerosene.

dechert on January 30, 2011 - 3:57pm Permalink | Subthread | Comments top

Qattara Solar Sustainable Eco-Cities Project

Here's what Egypt should do ... maybe with some seed money from the US as well as some design and engineering assistance ... maybe get some help from other European countries...

They have been talking about the Qattara hydro project for almost 100 years. They should do it now. The idea I describe is a bit different than other proposals (I wrote a bit about this recently, partly inspired by a comment by Bill Woods http://www.theoildrum.com/node/7340/762707 and http://www.theoildrum.com/node/7340/763041 ).

A little more detail: You'd have the Qattara canal (around 30 miles long), which would go from the Mediterranean Sea to the Qattara Lake. The Qattara Lake would be a body of water several miles in diameter at the level of the Mediterranean and near the Qattara Sea (size of England). For maybe half-way around the Qattara Lake, there would be a large, low, several miles long, dam -- horseshoe shaped. The dam would have 300 70-MW low head Kaplan Turbines (20 GW total) around the perimeter. The dam would also have a system of locks so large ships could navigate from the Mediterranean, through the canal, into the lake, and then down to the Qattara Sea.

So, they'd excavate the canal and the lake and build the dam. In addition, they would start construction of a solar eco-city on the lake near the dam that will use some of the power. I assume high voltage power lines also connecting Alexandria (figure the Qattara Lake and dam would be around 90 miles from Alexandria and 150 miles from Cairo).

Once the water starts flowing, it would take less than a year for the Qattara Sea to fill up (to a level 30 meters below sea level).

In the mean time, they would begin construction of another prototype solar eco-city on the far side (south) of the Qattara Sea. They'd build a large solar thermal-electric power plant for this south city. Once water is available from the Qattara Sea, they will pump water from the Qattara Sea for solar desalination plants. Experience with the south city pilot/prototype is then used to build other cities along the shore of the Qattara Sea.

Once the Qattara Sea has been filled, the water flow (and power) from the dam would be reduced. As more and more cities develop along the Qattara Sea, the water flow would be increased. The cities around the Sea would be connected to power lines from the dam. Eventually, the dam could run near full power (20 GW) all the time providing power at night, and during the day it would run replacing water being pulled out by solar-powered pumping by the cities around the Sea.

This proposal is superior to other Qattara proposals because it supports development of cities along the Qattara Sea, and the Qattara Sea would not become too salty since the cities would be pulling out vast quantities of water for desalination and greening of the Sahara.

This project could mean a new beginning for many millions of Egyptian citizens.

enemy of state on January 30, 2011 - 9:47pm Permalink | Subthread | Parent | Parent subthread | Comments top

the Qattara Sea would not become too salty since the cities would be pulling out vast quantities of water for desalination and greening of the Sahara.

I don't understand. Where does the salt go, if not into your newly formed sea (which also loses quite a bit of water to evaporation)? It would probably be cheaper to use the power to pump the groudwater resources that supposedly exist under tha Sahara. But greening the desert by mining groundwater has its own longterm sustainability issues, it might allow population overshoot to go into high gear, until the aquifer runs out!

In any case, after a few years you could probably use the new deadsea as a source of evaporites, as is done with the dead sea today.

dechert on January 31, 2011 - 3:44am Permalink | Subthread | Parent | Parent subthread | Comments top

Where does the salt go, if not into your newly formed sea ...

There are many zero-waste strategies in use or under development. See, for example,
http://www.csiro.au/science/ZeroBrineDischarge.html

Waste from desalination can be sequestered in building products, too.

The idea is not just to make a technical fix. There are all sorts of other green, sustainability, eco, zero-waste concepts that need to be installed along with it.

iagreewithnick on January 30, 2011 - 4:05pm Permalink | Subthread | Comments top

Got to say, the protests in Sudan strike me as a little odd - especially since they've now released (unconfirmed) results saying that 99.57% of people voted in favour of splitting the country in two.

http://english.aljazeera.net/news/africa/2011/01/2011130131451294670.html

metalRules on January 30, 2011 - 5:45pm Permalink | Subthread | Comments top

Nice article Gail thanks, and started some interesting dicusssion. Bye bye Mubarak I'd say, I hope the Egyptions get something better. I recall during my little tourist trip to Egypt you couldn't help but notice the skewed population, so many young people and kids. It must put pressure on available resourses in the future.

One resource I haven't seen discussed much is water usage (generally, not just damming for power generation).

I recall that there is some controversy over Egypt's huge allocation of Nile water - and a threat from Sudan, Ethiopia and others to start taking more water for themselves. If anyone knows more about this, and how serious this could be for Egypt I'd like to hear...

bugmeister on January 30, 2011 - 6:56pm Permalink | Subthread | Comments top

Mubarak's iniquitous rule,
Has been priced out of food and of fuel.
It will come to us all
But today it's their call:
Do they ride on or dine on the mule?

karlof1 on January 30, 2011 - 7:55pm Permalink | Subthread | Comments top

The planning for the Egyptian revolt's been going on for several years and is following the template illustrated by an Egyptian activist in this Wikileaked cable, http://wikileaks.ch/cable/2008/12/08CAIRO2572.html The mentioned April 6 movement is part of a larger number of civil society groups financed by the USG to refrom Mubarak's government; however, Apirl 6 wanted to go beyond what BushCo wanted (cable is dated 12/30/2008) and institute what we are now witnessing, a goal ambassador Scobey deemed "unrealistic." The question "Why now?" is answered in the cable as the goal was to have Murbarak replaced well before the 2011 election, a goal distinctly helped by Wikileaks and Tunisians, but also by Sudanese. You will note there have been zero counterdemonstrations in favor of Mubarak as corporate media would immediately show them, which was decidedly not the case in 2009 Iran. I point to Robert Fisk's fine reporting for The Independent for those wanting eyewitness views, http://www.independent.co.uk/opinion/commentators/fisk/robert-fisk-egypt...

ChrisInns on January 30, 2011 - 8:23pm Permalink | Subthread | Comments top

Overpopulation is the root cause of all these problems.

The socialist government builds the Aswan dam to provide cheap food, electricity and other amenities to the Egyptian population. The Aswan dam was kind of a dumb idea probably, but it might have worked - except the population has almost quadrupled since then. Now they're even worse off than before.

No good has come of this population growth, and when the Eqyptian population stabilizes - and it will do soon inevitably - Egypt is going to face an aging population problem that will dwarf anything faced by the West.

Matt on January 30, 2011 - 8:45pm Permalink | Subthread | Comments top

My latest post shows details on oil export extinction, Westexas' export land model and petroleum & food subsidies:

31/1/2011
Egypt - the convergence of oil decline, political and socio-economic crisis
http://www.crudeoilpeak.com/?p=2525

WebHubbleTelescope on January 30, 2011 - 9:44pm Permalink | Subthread | Parent | Parent subthread | Comments top

Look at that uptick in NGL right after 2004. This is consistent with Rune's recent data demonstrating how NGL is the principal liquid replacing conventional crude oil.

zaphod42 on January 31, 2011 - 12:54am Permalink | Subthread | Parent | Parent subthread | Comments top

Also a good example of ELM.

Of course, Chart 3 (Population) holds the key the the problem... in Egypt, and in the World.

Isaac Asimov used to rant about it! Usually ending with the question, "Isn't anybody listening? Doesn't anybody care?"

Sadly, no one who matters seems to have heard, or to give a damn.

Craig

unrepentantcowboy on January 30, 2011 - 10:03pm Permalink | Subthread | Comments top

Two books go a long way toward understanding what's going on in Egypt. First is Kunstler's long emergency. Second is Strauss and Howe's the fourth turning.

A new generation comes of age and they are going to kick ass and take names. Not just here, but world wide.

Cool one on January 30, 2011 - 11:08pm Permalink | Subthread | Comments top

EGYPT is the "poster child" of the post peak oil world....
End of cheap oil, end of cheap food, civil unrest, riots, poverty, and many other countries are right behind Egypt at the breaking point.

Pretty soon, people will connect the dots from oil to food to life.
Sad that it has resulted in violence. People have become too dependent on the government for support. Same thing could happen here in the U.S. when our oil imports run out. Rising costs of food, energy, and healthcare is already putting a big crimp in the middle class lifestyle.

I found it odd to visit a family with money problems to discover that they had satellite TV, cell phones and other luxuries still operating. Priorities are clearly out of order these days.

Cool one on January 30, 2011 - 11:18pm Permalink | Subthread | Parent | Parent subthread | Comments top

Kind of odd that most people think that government reform will solve the problems in Egypt....
Gov't can't create more oil, and can't grow more food.
If the people of Egypt are driven out of hope for change, then it is their last hope.
Replacing the leader may provide temporary relief, but long term they are out of time, oil, food, and money.

ChrisInns on January 30, 2011 - 11:56pm Permalink | Subthread | Parent | Parent subthread | Comments top

Kind of odd that most people think that government reform will solve the problems in Egypt....
Gov't can't create more oil, and can't grow more food.

The government there has done too much already. I'm no libertarian but what has all this cheap food and other staples lead to other than crazy overpopulation? No government on Earth, even the wealthiest, could keep up with the absurdly high population growth rate Egypt has experienced over the past few decades.

Does the general populace there think overthrowing the current government will solve all their problems? The root cause of most of their problems is looking them in the mirror each day.

Heisenberg on January 30, 2011 - 11:20pm Permalink | Subthread | Comments top

"An era of cheap food may be coming to a close":

http://www.msnbc.msn.com/id/41311106/ns/business-retail/

To the person who said that $1.3B per year in foreign aid to Egypt seemed like a great bargain...I would agree, but only if they would have used some of it to educate and employ their women, and to conduct robust family planning education and provide free access to various effective means of birth control...rather than all those nice M1A1 Abrams tanks we now see sitting in the middle of their streets.

If only Egyptians had achieved zero population growth back in 1990"

http://www.nationmaster.com/country/eg-egypt/Age-_distribution

http://www.nationmaster.com/country/eg-egypt

That's OK, we will show the world how it is done by controlling our own population:

http://www.nationmaster.com/country/us-united-states/Age-_distribution

I'm sure that 400+M Americans circa 2050 will be a real plus for our sustainability.

Merrill on January 30, 2011 - 11:42pm Permalink | Subthread | Parent | Parent subthread | Comments top

Emigration to the Gulf countries, to Europe and to other countries from Egypt has been an outlet for a significant part of the Egyptian population growth. Recently, due to economic factors emigration has slowed and some migration back to Egypt has occured. Note also that remittances home from emigrants was estimated to be $9.6 billion or 6% of GDP prior to the economic recession and have dropped at least $2 billion on an annual basis by the end of 2009.

Economically, Egypt does not appear to be a going concern.

enemy of state on January 31, 2011 - 1:15am Permalink | Subthread | Parent | Parent subthread | Comments top

If only Egyptians had achieved zero population growth back in 1990"

I find this a little bit confusing. Every article I've seen about Eqyptian unemployment always stars some educated younf man who can't get a job bemoaning the fact he can't get married unless he gets a job. That sounds like a form of population control. But, yet the population has been rising rapidly. So I guess, the few lucky ones must have a lot of children.

Liz on January 31, 2011 - 4:00am Permalink | Subthread | Comments top

A very interesting comment on a thread from DailyKos, where these events are being followed closely:

The online activists that coordinated the protests in Tunisia and Egypt have more scheduled in the coming two weeks. First is Sudan then Syria, Algiers, Libya and Morocco. Basically the entire ME is set to go. I've also seen references to Saudi Arabia on the Anonymous IRC channel.

http://www.dailykos.com/story/2011/1/30/133920/160?detail=f

Liz on January 31, 2011 - 4:02am Permalink | Subthread | Comments top

A very interesting comment on a thread from DailyKos, where these events are being followed closely:

The online activists that coordinated the protests in Tunisia and Egypt have more scheduled in the coming two weeks. First is Sudan then Syria, Algiers, Libya and Morocco. Basically the entire ME is set to go. I've also seen references to Saudi Arabia on the Anonymous IRC channel.

http://www.dailykos.com/story/2011/1/30/133920/160?detail=f

YvesT on January 31, 2011 - 8:34am Permalink | Subthread | Comments top

Egypt problem, and the world problem in general, is more the degenerated pig farm that is now the US, more than anything else.

America is basically dead, proof (for instance) :
http://www.youtube.com/watch?v=4bHZRSlhJxY&feature=related

So the message should be : either you target at least to have a $3 tax a gallon on gas in your pig farm of a "nation" within two years, in your best financial interest of course (if you are still able to understand what it means), and also to send a message towards your trepanated airheads "citizens" thick skulls, or we definitely consider you as totally irrelevant on the world stage.

Powerfull Army ? Yes I know, and people are getting a bit tired of it, to say the least ...