Sunday, February 10, 2013

Post Peak Oil Economic and Population Scenarios: Part 5 a Late Stage Global Export Mitigation strategy

In Part 4 of this series, I described the consequence of four regions engaging in a late-stage export mitigation strategy to limit their petroleum exports, in a effort to their keep per capita petroleum consumption rate (“per cap cons” in the figures to follow) above a critical level, 1 barrel per person per year (1 b/py), that I estimated would be needed to sustain the petroleum driven food production/distribution system. 
I am calling this “late-stage” export mitigation because mitigation doesn’t start in each of the four regions region until the region is on the brink of starvation, and then the mitigation is done just enough to prevent starvation.    
The four regions engaging in late-stage export mitigation have varying levels of success in forestalling the year when their per capita petroleum consumption rate drops below 1  b/py.
Engaging in export mitigation starting now in 2012, Africa (AF) could delay dropping below 1 b/py until about 2021.  By starting mitigation in 2023, the former Soviet Union (FS) could delay dropping below 1 b/py until about 2042.  Export mitigation starting in 2031 would only delay the remaining Asia-Pacific region (rAP; Asia minus FS, JP and China, CH) from dropping below 1 b/py by two years, in 2033.  Mitigating its exports of refining gains starting in 2034 could allow Japan (JP) to delay declining below 1 b/py by five years, to 2039.    
Questions, Questions, Questions
Understandably, the year when each of these regions drop below 1 b/py, also corresponds to the year when that region stops exporting petroleum entirely to other regions. 
At the end of Part 4, I raised the question: what happens if all of these regions engaged in petroleum export mitigation (i.e., “global export mitigation”) in the time frames presented above? 
In particular, what effect does cutting the exports from all of these four regions have on the per capita petroleum consumption rate of each of the other regions, and, of the other five regions in my survey (ME, SA, NA, EU, CH)? 
Finally, as a consequence of this global export mitigation, do any other regions, due to the lack of exports, now drop below the critical level of 1 b/py, and therefore have their own issues of starvation and death?
Assessing a Late-Stage Global Export Mitigation Strategy
To answer these questions, for each of the four export mitigating regions (FS, AF, rAP, JP), I have recalculated the region’s exports to each of the other regions assuming a proportional reducing in exports as compared to the predicted export from my PIE analysis in my previous series (starting here at Part 1). 
To take an example, for 2015 I estimated that, to keep its per capita petroleum consumption at 1 b/py, AF would have to cut it’s total exports from a predicted amount of 1.74 billion barrels per year (bby) (e.g., the solid black line in Figure 14 of Part 4 of the PIE analysis series) to 1.41 bby. That’s a cut of 19 percent, or, an export reduction ratio of 0.81 (1.41/1.74).  Therefore, I have assumed that the amounts of petroleum that AF is predicted export to the other eight regions are proportionally reduced by this ratio.  So, for example, instead of exporting 0.605 and 0.468 bby to NA and EU, respectively, in 2015 (green and blue solid lines in Figure 14), AF only exports 0.488 and 0.379 bby, respectively.  This means, of course, that there will be corresponding reductions in NA’s and EU’s total petroleum consumption rate and hence per capita consumption rate.  And also, of course, under this global export mitigation strategy, when AF stops exporting entirely in 2021, then NA’s and EU’s total petroleum consumption rate and per capita consumption rate would no longer include an import contribution from AF.
Got it?  Good—now just go and repeat this calculation for all four regions from 2012 on, and then apply these revised export numbers to recalculate the petroleum consumption rates and per capita consumption rates for all 9 regions, and voilĂ , you have the analysis results for this post. 
In the summary to follow, I will just show the summary figures of the changes to the per capita consumption rate, and the population reduction consequence, if any. 
Even though it’s redundant for some regions, by way of summary and review, I’ll show the per capita consumption rate and population data for all nine regions and briefly review each region’s petroleum import dependencies.
Middle East (ME)
Figure 27 shows the ME’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
Petroleum export mitigation by FS, AF, rAP and JP has no effect on ME, because ME does not get any substantial petroleum imports from any of these regions.  In fact, ME doesn’t get any substantial petroleum import from any region, so according to this strategy, it doesn’t matter to ME what any of the other regions do. The ME’s per capita consumption rate is governed by its predicted production and export rates, and population growth rate.  And, because the per capita consumption is predicted to stay well above 1 b/py throughout my study period, that population just keep on growing as predicted by the census bureau. 
Former Soviet Union (FS)
Figure 28 shows the FS’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
Petroleum export mitigation by AF, rAP and JP has no effect on FS because, like ME, FS does not get substantial petroleum imports from any of these regions, or any other region, for that matter.
As discussed in Part 4, FS’s own domestic export mitigation strategy starting in 2023, could maintain per capita consumption at 1 b/py until 2042, and thereby delay to on-set of a population crash until then.
Africa (AF)
Figure 29 shows AF’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
Petroleum export mitigation by FS and JP has a negligibly small effect on AF because AF’s imports from these regions are very small.  As discussed in the previous PIE analysis series (Figure 15 in Part 4), in 2011 total imports into AF are small (e.g., about 0.4 bby) and AF’s two biggest import sources are ME (0.19 bby) and EU (0.14 bby), with rAP a distant third (0.037 bby).  However, there is an upwards trend for increasing imports from rAP until the mid-2020s.  Under the present global mitigation strategy, when rAP starts to cut its exports in 2031, and ended all exports in 2032, there is a downward dip in AF’s per capita consumption rate. 
Consequently, with global export mitigation, although the time for AF’s per capita consumption rate to reach 1 b/py is still delayed until the same year 2021, as compared to the “solo” export mitigation scenario (Figure 22 in Part 4), where, AF cuts its exports but still receives imports from the other regions.
However, with global export mitigation the subsequent drop in per capita consumption rate after 2021 is steeper than with “solo” export mitigation. 
For instance, assuming global export mitigation, by 2033, AF’s per capita consumption rate is down to 0.081 b/py, at which point the AF has dropped to its pre-petroleum population level.
This is in contrast to the “solo” export mitigation scenario, where AF’s per capita consumption rate didn’t drop to ~0.081 b/py until 2037.
South America (SA)
Figure 30 shows SA’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
SA receives almost no imports from FS and JP, but, it does get some imports from AF and rAP (Figure 20 from Part 5 of the PIE analysis series).  NA is actually SA’s largest import source.
Consequently, the global export mitigation strategies for AF starting 2012 and for rAP starting in 2031 cause slight dips in SA’s per capita consumption rate, which I would expect to have a minor negative economic effect on the region as compared to the scenario without mitigation (dashed red line).  For instance, in 2021 and 2032, when AF and rAP are predicted to stop exporting altogether, SA per capita consumption rate is predicted to be 3.63 and 2.96 b/py, respectively, as compared to 3.71 and 3.08 b/py assuming no export mitigation. 
The size of the declines in per capita consumption are minor and SA’s per capita consumption rate stays well above 1 b/py.  Consequently, SA is expected to be relatively unaffected be global export mitigation and to follow the census bureau’s population growth trend.
North America (NA)
Figure 31 shows NA’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
NA gets petroleum imports from several regions, and among them, AF and FS are important sources (Figure 27 from Part 6 of the PIE analysis series), while imports from rAP and JP are very minor. 
It therefore may be surprising to see that the global export mitigation strategy doesn’t appear to have much effect on per capita consumption, as compared to a prediction trend without export mitigation (dashed red line).   
There are a few reasons for this:
First, as illustrated in Figure 27 from Part 6, the long term trend predicted from my PIE analysis are for declining imports to NA, and therefore, the PIE analysis already anticipated declining per capita consumption due to decreasing imports, declining imports from AF and eventually from FS.  For instance, even without export mitigation, exports from AF were predicted to be down from 2011 levels of about 0.87 bby to 0.19 bby by 2021.  For FS after peak imports to NA in 2016 at 0.37 bby, by 2042 import to NA were predicted to be down to 0.04 bby.   So, when export mitigation calls for the end of exports from AF in 2021 or for FS in 2042, the impact on NA is rather small.
Second, based on its present production trend and the logistic equation fit to that trend (Figure 24 from Part 6 of the PIE analysis series), NA is expected to maintain its petroleum production at about 5 bby with a slow declining trend to the end of the study period to 2065.  There are also trends for NA to substantially increase its interregional exports, for domestic consumption to decline.  The bulk of the domestically produced petroleum will provide domestic consumption as imports diminish.  Consequently, as NA’s imports become less important to domestic consumption, global export mitigation by AF and FS also becomes less important.
However, global export mitigation does worsen NA’s predicted per capita petroleum consumption as compared to a no mitigation scenario.  Therefore global export mitigation would worsen the economic decline that I expect to be coupled to declining per capita petroleum consumption.
For instance, in 2021 and 2042, when AF and FS are predicted to stop exporting altogether, NA’s per capita consumption rate is predicted to be 11.7 and 6.5 b/py, respectively, as compared to 12.2 and 6.2 b/py assuming no export mitigation.  That corresponds to -0.5 and -0.3 b/py decreases, respectively, which is significant, but still relatively small for a region that would still have a per capita consumption level that is 20 times higher than this.   
Similar to SA, the size of the declines in per capita consumption are minor and NA’s per capita consumption rate is no where near the critical level 1 b/py.  Consequently, NA is expected to be relatively unaffected be global export mitigation and to follow the census bureau’s population growth trend. 
Because NA’s domestic consumption is predicted to decline, in part due losses in imports but domestic production stays constant, my PIE analysis predicted that NA becomes a net petroleum export in about 2029.  As you will see, some regions like EU and JP, may be counting on this. 
European Region (EU)
Figure 32 shows EU’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
As I have pointed out previously, EU is presently even more dependent on imports than NA, and in particular, FS is EU’s major import source, with ME and AF virtually tied for second and third spot. There are smaller imports from rAP and very small imports from JP (see Figure 32 of Part 7 of the PIE analysis series). 
AF’s mitigation strategy starting in 2012 with exports stopping entirely by 2021, doesn’t appear to have much effect on EU per capita consumption as compared to no export mitigation PIE analysis.  I think that is due to the same reasons explained for NA.   
My PIE analysis already factored in the trend of declining imports from AF to EU, even without mitigation (e.g., from 0.81 in 2011 to 0.14 in 2021) and EU’s present petroleum consumption rate of about 5.4 bby is quite high relative to the import loss difference from AF in scenarios with versus without export mitigation. 
Things start to get interesting in the 2030s, when we see a substantial drop in per capita consumption as compared to the no mitigation strategy.  Then we see a population crash starting in 2039, because EU’s per capita consumption rate dips below my critical level of 1 b/py.    A recovery back to the census bureau’s population trend line occurs by 2061, due to the prediction of a slow increase in imports from NA.
FS starts to mitigate its exports in 2023, and stops exporting entirely by 2042, and rAP’s mitigation starts in 2031 and stops exporting entirely by 2033.  These two import losses is what causes EU’s per capita consumption rate to depart from the no mitigation PIE analysis prediction (dash red line) by around 2030 as it dips below 2 b/py. 
After reaching 1 b/py in 2039, the per capita consumption rate drops to a minimum of 0.89 b/py in 2042, the year that FS stops exporting entirely.  This, in turn, results in the prediction of a population crash of about 11 percent, from the census bureau’s estimated population of 581 million in 2030 to a population of 519 million in 2042: a drop of 62 million in three years. 
The main factor preventing a complete crash, back down EU’s pre-petroleum era population of 400 million, is the predicted continuing slow increase in imports from NA.  For instance, by 2061, either with or without global export mitigation NA is predicted to be supplying ~80 percent of EU’s petroleum consumption.  As already explored in Part 7 of the PIE analysis series, assuming the continuation of its present production trend, EU’s production drops below 0.4 bby in 2022 and below 0.1 bby by 2032.  By the mid-2030s EU will become like Japan as being totally depend on petroleum imports. 
Japan (JP)
Figure 33 shows JP’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
You should know by now that JP gets by far the majority (e.g., about 79% in 2011) of its petroleum from ME, so automatically we shouldn’t expect much of an effect from export mitigation by AF, FS or rAP (Figure 37 from Part 8 of the PIE analysis series). 
Still, the other 21% comes mostly from rAP and FS.  And from the PIE analysis, there is a downwards import trend from ME and rAP to JP.  Imports from JP’s third largest supplier, FS, are currently in an upwards trend, with a predicted peak in 2017.  Imports from NA are in a long slow upwards trend, and eventually, in the mid 2030s, NA’s imports to JP surpasses all of these regions, not because of a huge increase in imports from NA, but rather because the other region’s exports have gone down. 
JP’s imports from AF are very small and therefore AF’s export mitigation strategy starting in 2012 has little effect on JP’s per capita consumption. 
Export mitigation by FS starting in 2023, with no exports by 2042, and rAP’s mitigation starting in 2031, with no exports by 2033, does effect JP’s per capita consumption slightly, in that JP’s per capita consumption drops to 1 b/py in 2033 instead of 2034 compared to the “solo” mitigation strategy presented in Part 4 (Figure 26), where JP mitigates its exports, but is assumed to continuing receiving imports from other regions, including FS and rAP. 
Additionally, JP’s population crash, now starts in 2039, instead of 2040, and it is much steeper.
For instance, under the global mitigation strategy, JP’s population drops from the census bureau estimate of 106 million in 2038 to 72 million by 2042—a population decrease of 34 million in 5 years.  In contrast under the solo mitigation strategy, the population declined to 87 million by 2042—“only” a 19 million decrease in 5 years. 
The predicted slow increase in imports from NA eventually brings the population back up to the census bureau’s prediction line of 80 million in 2064.  For instance, either with or without global export mitigation strategy, by 2061, NA is predicted to be supplying ~96 percent of JP’s petroleum consumption because all other export sources have ended.
Of course, the 2060s seems like a long ways away, so we can’t make to much of this, but, one starts to get the impression that in the mid- to latter part of century, NA’s predicted relatively small exports to JP and to EU could become very important to these regions.     
The remaining Asia-Pacific region (rAP)
Figure 34 shows rAP’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
Once again, like JP, rAP gets the bulk of its petroleum imports from ME (e.g., about 72% in 2011), so we shouldn’t expect that export mitigation by AF, FS and JP will have any dramatic effects on this region (Figure 47 from Part 10  of the PIE analysis series). 
Still, the other 28% comes mostly from JP and FS.  Moreover, unlike JP, there has been, for the last decade, an upwards import trend from ME to rAP, although this may be peaking soon 2012-13 (see Figure 47 in Part 10 of PIE analysis series).  From the PIE analysis, imports from rAP’s second largest import supplier, AF, are also predicted to head downwards and come close to zero by the mid-2020s.   Imports from it third largest supplier CH are in a flat trend with a mild peak in the mid-2010s and slowly declining thereafter.  FS’s exports to rAP are quite small and were also predicted to peak in the mid-2010s. 
One of the few regions that JP exports non-trivial amounts of petroleum to is rAP.  For instance, in 2011 JP exported slight more petroleum to rAP (0.076 bby, that is, 76 million barrels per year) than did NA (0.075 bby).  Of course, rAP’s population is 2.4 billion, and therefore, this import amount from JP may seem like a trivial amount.  However, try to keep in mind that 0.076 bby would keep 76 million people at the critical level of 1 b/py. 

From the PIE analysis, JP’s exports to rAP are predicted to peak in the early 2020s.  There are longer term trends for increases in imports from SA (peaking in the early 2030s) and from NA (increasing out to the end of the study period in 2065). 
Figure 34 reflects that, because rAP’s imports were already predicted to go down over the next decade, AF’s export mitigation strategy starting in 2012 has little effect on rAP’s per capita consumption. 
Export mitigation by FS starting in 2023, has a slight effect on rAP’s per capita consumption, in that rAP per capita consumption still drops below my critical 1 b/py level in 2031.  However, FS’s continuing export declines, with no exports by 2042, plus, JP’s mitigation starting in 2033, with no exports by 2040, does cause rAP’s per capita consumption to decline more steeply as compared to the “solo” mitigation strategy presented in Part 4 (Figure 24), where rAP mitigates its exports, but is assumed to continuing receiving imports from other regions, including FS and JP. 
For instance, in 2041 under the solo mitigation strategy, the predicted per capita consumption and population are 0.607 b/py and 1.91 billion, respectively.  In comparison, under the global export mitigation strategy, the predicted per capita consumption and population are 0.574 b/py and 1.82 billion. 
Perhaps you are getting numb to the population numbers? Keep in mind that we are talking about a population difference of 90 million people here (1.91 billion vs 1.82 billion). 
These population differences tend to get smaller towards the end of the study period.  For instance in 2065, the populations for solo versus global export mitigation are 669 versus 651 million, respectively.  I think this is because, by the end of the study period, rAP’s main import sources are predicted to be in order of importance: NA, SA, and CH, with NA providing from 56-59 percent of rAP’s total imports.  And AF, FS, and JP provide rAP no imports—this is with or without the global export mitigation strategy. 
China (CH)
Last but not least, Figure 35 shows CH’s per capita petroleum consumption and population with the global petroleum export mitigation strategy in effect.  
Somewhat like JP and rAP, CH gets the largest (e.g., 39% in 2011) part of its imports from ME, but, unlike JP and rAP, CH also gets substantial portions of its imports from AF (22%), FS (14%), rAP(13%), SA (9%) and lesser portions from JP, NA and JP (1.4-0.8 % each; all for 2011 from Figure 42 from Part 9  of the PIE analysis series).  Therefore, we should expect that export mitigation from AF, FS and rAP will detrimentally effect CH’s petroleum consumption rate. 
AF’s exports to CH are predicted to peak about now in 2012, and both FS and rAP exports to CH are predicted to peak around 2015-16 (all from Figure 42 of the PIE analysis series).  Consequently, since declines after these peaks are expected anyways, the impact of export mitigation in the future is less than what one might expect. 
Still, the effect of AF’s export mitigation starting in 2012 (blood red solid line) is pretty damaging the CH’s growth prospects—the previously predicted modest increase in per capita petroleum consumption until 2017-18 (dashed red line corresponding to the no mitigation PIE analysis) is cut short and now occurs in 2015.
By 2021 when AF is predicted to stop exporting altogether, CH’s per capita consumption rate is predicted to be 2.61 b/py  as compared to 2.75 b/py assuming no export mitigation. 
Then FS’s export mitigation starting in 2023 with complete export stoppage  by 2042, rAP’s mitigation in 2031 with export stoppage in 2033 and finally JP’s mitigation starting in 2034 with  export stoppage by 2040, all combine to cause CH’s per capita consumption to drop more steeply from 2030 to 2040. 
For instance, in 2042, by the time rAP, JP and FS are all predicted to stop exporting altogether, CH’s per capita consumption rate is predicted to be 1.81 b/py, as compared to 1.94 b/py assuming no export mitigation.   
By the end of the study period these differences tend to diminish, for the same reasons as explained for rAP—by 2065, CH imports from AF, FS rAP and JP are all very small with or without export mitigation. 
According to the PIE analysis with mitigation by 2061 ~76% of CH’s remaining total imports of 0.46 bby are from NA and SA, with the remainder coming from rAP, JP and EU and almost nothing from FS, AF, and ME.  
But really its the predicted domestic production of 2.41 bby that supplies the bulk of CH’s consumption, not imports.  Indeed, the continuation of domestic production is what leads the PIE analysis to predict that CH would become a net petroleum exporter by about 2049—exporting the majority of its petroleum to rAP. 
Similar to SA and NA, by the end of the study period, CH’s per capita consumption rate is still well above the critical per capita consumption rate of 1 b/py and therefore CH is expected to follow the census bureau’s population growth trend. 
Conclusions
At least the conclusion I’ll try and keep short.  Late-stage global export mitigation still helps all four regions, AF, FS, rAP and JP, even if we assume a global mitigation by all four of these groups. 
But, there are some unintended (unexpected?) consequences.
For FS, with no significant amount or trend of importing petroleum, global export mitigation has no consequence on FS.
For AF, the delay in dropping below the critical per capita petroleum consumption rate of 1 b/py is still the same, 2021, but in subsequent years, the drop in per capita consumption rate is driven even lower, when rAP starts to cut its exports. 
For rAP and JP, which both heavily rely on ME for their imports, global export mitigation cuts short the delay in the onset of dropping below 1 b/py by about a year, and afterwards, the per capita consumption rate drops more quickly.
And what about the other five regions?
ME, like FS, has no significant amount or trend of importing petroleum, and so global export mitigation has no consequence on ME. 
NA and SA show slightly steeper declines in per capita consumption rate, but, both remain well above the 1 b/py level.
CH and EU are clearly the regions most affected. 
For CH, export mitigation by AF cuts short the projected continued increase in per capita consumption rate in the mid 2010s, and subsequent mitigation by FS, rAP and JP also causes CH’s per capita consumption rate to drop more steeply in from the mid-2020s to 2040.  But, on the strength of its domestic petroleum production, the per capita consumption rate remains well above the 1 b/py level. 
EU is relatively unaffected by AF’s mitigation, but as its own predicted domestic production declines and imports from the ME eventually go away, export mitigation by FS and rAP is big enough to drive EU’s per capita consumption rate below the 1 b/py level by 2039.  This in turn results in a prediction of a population crash in the 2040s.  Like JP, EU’s population may come back, if NA is able to maintain its long slow increase in exports to these regions into 2060s.
Some readers might view the late-stage global export mitigation strategy featured here as being way too pessimistic—surely these regions would wake up and start mitigating way before being on the brink of starvation, one might optimistically say.
For reasons presented in Part 4, I don’t see late-stage global export mitigation as pessimistic; rather, I see it as realistic. 
But, it still might be interesting to assess the consequences of a “mid-stage” mitigation strategy.   As you will see next time, optimism is in the eyes of region that is on the long end of the barrel, barrel of oil, that is. 
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It looks like my obligations are going take me off-line for about a month or so, but when I return, I plan to describe two more export mitigation strategies: “mid-stage” and “full-on.”