Geopolitics

Drilling Into Oblivion: Call Of The "Collapsologists"

An oil field outside Bakersfield, California.
An oil field outside Bakersfield, California.
Muryel Jacque

PARIS â€" Some figures will make your head spin. Since the end of World War II, the number of inhabitants on the planet has increased nearly three-fold. And in that time, people used more resources than were consumed during the entire history of mankind prior to 1945.

Even more alarming is how quickly consumption continues to accelerate. In 1990, the world needed les than 43 million tons of metal to function; in 2012, it needed 91 million, according to the World Bank. China, whose share went from 4% to 45% is partly responsible.

At this rhythm, our civilization could quite simply collapse in our time. This is the theory put forward by two researchers, Pablo Servigne, an agricultural engineer, and Raphaël Stevens, an environmental advisor, in their essay "Comment tout peut s'effondrer" (How it Could All Collapse), published last spring.

These “collapsologists,” as they refer to themselves, are positive that if we run out of oil, gas and coal, our system simply won't be able to function. "Almost everything we consume depends on it: transportation, food, clothing, heating etc.” they write.

Servigne and Stevens believe we are reaching an energy production peak, and that the main minerals and metals could be heading the same way. One of the materials concerned, of course, is oil, which continues to be depleted even though public concern over its supply has waned as a result of the shale oil boom in the United States.

The real question, at any rate, isn’t about the quantity of black gold left beneath our feet, but at what price we’re ready to extract it. The operation becomes increasingly expensive because it becomes more and more complex: matter needs to be collected deeper and deeper, or extracted by other means, from bituminous sands in the Arctic, for example.

Saudi petroleum costs less than $20 per barrel to extract. U.S. shale oil costs between $60 and $80. And oil from Kazakhstan is set to reach $125 per barrel. The problem? Beyond a certain price, between $120 and a maximum of $150, demand goes down.

“Forty years ago, they said there were 40 years of oil left," says Nicolas Meilhan, a consulting engineer at Frost & Sullivan. "We’re still told the same thing today. The difference? Forty years ago, it was 40 years of $10-oil. Now it’s 40 years of $100-oil, and in 40 years, it'll be 40 years of $1,000-oil. But we probably won't have the means to extract it.”

Even if the physical limit is not reached, the economic limit, which can of course vary according to technical progress, is very real. The end of the “cheap” oil extraction, at the very least, is getting closer.

One depends on the other

The same thing goes for many metals, some of which risk shortages within about 15 years. Aluminum and iron are abundant in the earth’s crust. But other major industrial metals such as copper, zinc and nickel, specialty metals such as tantalum or tungsten, and even precious metals are more and more complicated to extract from the soil, technically and economically.

“Geologists will tell you there aren’t any resource problems. In reality, it’s important to take into account the interaction between energy and metals,” says Philippe Bihouix, an engineer specialized in metals and author of L'Age des low tech (The Age of Low Tech).

Today, miners need to dig up 125 tons of rock to produce 1 ton of copper. A century ago the ratio was 50:1. In South Africa, gold mines can go as deep as almost 4 kilometers. Bihouix also points out that nearly 10% of the global primary energy is used to refine metals.

The inverse is also true. Accessing the material needed to produce energy requires metal. And the harder that material is to access, the more metal we need. Already 5% of the world’s steel is used in the oil and gas sectors alone. Renewable energies are also “metal-consuming,” as are connected objects or electric cars, which can contain three times as much copper as do diesel cars.

Of course, some metals can be successfully substituted. Apart from metals such as copper and lead, the current recycling rates are still very low. Rare earths are recycled at less than 1%. But recycling at 100% will never be possible.

This is why we need new economic models. Some advocate restraint, others degrowth, returning to local economies. Some even call for regulating births.

Throughout history, serious crises have enabled radical changes of consumption. In this way, the huge smog that suffocated London in late 1952 and killed thousands of people pushed Great Britain to pass a revolutionary law on air quality. After the 1973 oil shock, the whole world started finding other ways of producing electricity. In 2011, after the Fukushima disaster, Japan, suddenly deprived of nuclear energy, took unprecedented economic measures and encouraged its population to change their everyday habits.

But apart from these cases of major crises, our societies evolve very slowly. Perhaps we'll have to start mining space, as it holds infinite quantities of minerals and metals. The exploration has already begun.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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