Fragility, Bottlenecks and Brittleness (May 7, 2008)
Three analogies, same idea: our industrialized, globally interlaced economy is extraordinarily dependent on a handful of resources and supply chokepoints which are highly vulnerable to disruptions.
I have touched on this before ( Brittleness, January 29, 2007) and now longtime contributors Albert T. and Riley T. have each submitted further examples.
We might recall the the Pareto Principle (February 19, 2007) here, which expresses the truism that 20% of the causal factors/actors bring about 80% of the consequences. Put another way, the "vital few" (20%) influence effects more than the "trivial many" (80%). The corollary, the 4/64 rule, indicates that a mere 4% can trigger 64% of the effects.
This is a special case of the wider phenomenon of Pareto distributions. If the parameters in the Pareto distribution are suitably chosen, then one would have not only 80% of effects coming from 20% of causes, but also 80% of that top 80% of effects coming from 20% of that top 20% of causes, and so on (80% of 80% is 64%; 20% of 20% is 4%, so this implies a "64-4 law").
That suggests that a mere 4% decline in oil production could create massive consequences-- ditto for 4% shortfalls in corn, wheat, soybeans, etc. Indeed, the grain shortgages sweeping the globe appear to have been launched by just this sort of seemingly modest gaps between demand and supply.
We all know we're virtually enslaved to petroleum, but Riley T. suggested a scenario which depicts a vulnerability few contemplate:
For years I have been thinking of our large cities as large heavily populated islands. All things to do with modern civilization are imported, ( electricity, food, petroleum products, water and most every thing else ) and all waste products have to be exported.Riley followed up this list of oil importers and producers, drawn from the energy shortage website:
I compared the top 15 producers to the top 15 consumers and made a list of the countries that were on the consumer list and not on the producer list. The countries that were on the second list and not on the first by order of total consumption are:Thank you, Riley. Just as a lagniappe, here is a list of the top 15 sources of U.S. imported oil:
Total Petroleum Imports Top 15 Countries (EIA, 5/28/08)
Total petroleum is about 11 million barrels a day (thank you, Venezuela, #4) which presumably includes gasoline (yes, we also have to import that, too) but not natural gas.
Albert T. checked in with this report on the absolutely essential commodity you probably never heard of: potash:
China caught in potash crunch:Thank you, Albert, for alerting us to the shortage in a critical agricultural commodity.
Is fertilizer all that important? According to a variety of sources, the average yield for maize/corn in developing countries (i.e. those who can't afford fertilizer or can't get it logistically to farmers) is 30 bushels of corn per acre, compared to 150 bushels per acre in the heavily-fertilized U.S.
Five times the yield suggests a "green Revolution" entirely dependent on a limited supply of fertilizer ingredients (which include oil) that must be shipped across the globe by burning petroleum.
One of the "essential books" on my list (found in the books/film link at the top of the page) is The Future of Life E. O. Wilson. Wilson uses the analogy of a bottleneck to communicate the fact that environmental degradation is causing widespread extinctions of species. As the world industrializes and burns through its remaining rain forests and oil, pollutes rivers, paves over habitats with developments, etc., then only some species will emerge on the other side, so to speak, of Peak Oil/peak human population/peak food/peak everything.
This is a sobering concept, for surely humanity itself will have to pass through this same bottleneck, and pass through it with dwindling supplies of the very commodities which enabled our population to explode from less than abillion to over 6 billion in a historically brief time period.
1. The Pareto Principle suggets a mere 4% of causal conditions can leverage huge consequences on 64% of a market.
2. The smaller the number of sources and suppliers, the longer the supply chain and the more "just in time" that supply chain is, the more vulnerable end consumers are to even minor disruptions in that supply chain.
3. Bottlenecks can become chokepoints. The Strait of Hormuz and the Strait of Malacca are well-known (oil supply) shipping chokepoints. Other bottlenecks include refineries, natural gas ports, large ports for the shipment of fertilizer, grain and oil, key electrical grid nodes, etc.
Devil's Advocate department (and an important one it is here at OTM): Frequent contributor J.F.B. sent in this story on the unregulated oil futures and derivatives markets, which may be a key driver behind the recent spikes in oil prices:
PERHAPS 60% OF TODAY'S OIL PRICE IS PURE SPECULATION (Financial Sense)
For more on Riley's concept of mega-cities as islands, please see the excellent book on
the rapid growth and staggering vulnerabilities of mega-cities/mega-slums:
Planet of Slums
by Mike Davis.
Two new wonderful recipes have been added to What's for Dinner at Your House?: Simple Chicken Tajine (Morocco) and Beef and Barley Vegetable Soup.
Journal has also been updated: new insights and a mysterious poem.
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