In order to know what the “World Oil Shock Scenario” is, and the premises behind this series of posts, it’s best to first read
World Oil Shock Scenario and Fate of Wisconsin Part I
Part I ended on this note–
If the Art Berman “dumbass case” for United States fracked-shale oil production were to hold up in future, this would mean about a 4% annual decrease in United States petroleum production beginning 2025-26, which would certainly be “leveraged” as we discussed at the beginning of the post–to national GDP growth, and to job losses on a fairly major scale. That this would have major impact on Wisconsin, where we still think of our economy as a “manufacturing economy” and where truck driving is in the top 5 occupations statewide, is not debatable.
Next let’s examine how we will prepare for these Oil Shock Scenarios at the State and Local levels. Who is preparing? Who is not? Why not?
The first thing we’ll discover is that the Wisconsin Legislature has not only not been preparing for follow-on oil shocks to the one which played a large part in the 2008-2009 markets collapse in the Great Recession, but Legislators have instead been moving toward decreased preparedness, and greater dependence upon the least-stable fossil fuel sources, fracked petroleum and fracked natural gas from the USA’s shale fields.
Wisconsin’s Annual Energy Consumption: What energy sources?
The Energy Information Agency’s most recent report chart isn’t that recent, dated 2017. This chart was made from the csv download their website offered. Stating everything in trillions of BTUs does help for comparisons of the relative scale of energy sources contributions to the state economy.
As you can see, at 16.7 Trill. BTU, “other renewables” contribute a tiny amount, roughly 3.5%, relative to the 487 Trill. BTU coming from petroleum.
Hydroelectric power can be expected not to grow very much in the decade of time ahead in which Wisconsin needs to figure out how we will energize our lives. The “other renewables” would be wind power, solar power, and geothermal (solar hot water and groundwater). As you can see, at 16.7 Trill. BTU, “other renewables” contribute a tiny amount relative to the 487 Trill BTU coming from petroleum, that is, roughly 3.5%.
In the chart above we see “biomass” listed as a significant energy source. However, the critical literature on ethanol reveals that it has a very low Energy Return on Energy Investment, EROEI. It’s not merely the fact that ethanol is made in energy-intensive ethanol refineries around the state. More importantly, is that the growing process for commodity corn used in ethanol production is itself grown in a highly energy-intensive way. Every step of the corn-growing process uses enormous machinery consuming copious amounts of diesel fuel per hour, in the tractors for field prep, tractors pulling the planters, tractors spraying glyphosate after corn emergence, tractors pulling side-dressing fertilizer-dispensing machines, combines used to harvest the corn, fleets of large trucks used to transport the corn to grain bins where copious amounts of natural gas from fracked shale regions are burned to dry the corn to prevent its spoilage. Then, trucks are again required to haul the commodity corn to ethanol plants where the refining into ethanol is done, after which more trucks are used to haul the ethanol to petroleum refineries for blending.
For example, “We believe that outside certain conditions in the tropics most ethanol EROI values are at or below the 3:1 minimum extended EROI value required for a fuel to be minimally useful to society.”
So, we can dismiss ethanol as a “renewable” energy source and focus down on the hydroelectric and “other renewables” which total 41 trillion BTUs of energy consumption for the state. Nonetheless, the Energy Information Agency does include ethanol in their Overview of Wisconsin energy sources:
Wisconsin has several renewable energy resources. The state’s fertile soil and strong agricultural economy make it a leader in the market value of agricultural products.9,10 Wisconsin’s corn crop feeds the state’s ethanol production facilities.11 Methane, created as anaerobic digesters process industrial and municipal wastewater and the manure from some of the state’s more than one million cows, is used for heat and electricity generation, and methane gas is captured from the state’s landfills as well.12,13 Wisconsin has ample biomass resources in its more than 16 million acres of forestland and from the agricultural residue from the state’s many farms.14,15 Dozens of dams throughout the state supply hydroelectric power,16 and wind resources have been developed on the ridges in eastern Wisconsin near Lake Michigan and in the southwestern part of the state.17 Although Wisconsin has limited solar potential, solar power contributes a small but increasing amount of the state’s electricity generation.18,19
Wisconsin’s primary renewable resource is biofuels. The state is among the top 10 ethanol-producing states in the nation, and ethanol is one of the few energy resources that Wisconsin produces and sends to other states.27,28,29 Wisconsin’s nine ethanol plants can produce more than 500 million gallons of ethanol per year from facilities that use corn as a feedstock.30,31 The state is one of the nation’s leading corn-producing states, and most of the ethanol plants are located in agriculturally rich southern and central Wisconsin.32,33 The state also has two facilities that can produce 27 million gallons of biodiesel each year from distillers corn oil and used cooking oils.34,35
Renewable resources power nearly one-tenth of Wisconsin’s net electricity generation. The state’s renewable electricity generation comes from hydroelectric, wind, biomass, and solar power plants. Hydroelectric power contributes almost half of the state’s renewable electricity generation.36 Of the approximately 3,900 dams in Wisconsin about 150 are used to generate hydroelectric power. Large hydroelectric dams were constructed in the 1950s and earlier, but a few small hydroelectric facilities were recently created by adding generators at existing dams.37,38
Wisconsin, one of the top 10 ethanol-producing states, can produce more than 500 million gallons of ethanol per year. Biomass resources in Wisconsin accounted for about one-fourth of the state’s renewable electricity generation in 2018.39 There are several waste-to-energy systems (anaerobic digesters) and landfill facilities in Wisconsin that capture biogas (methane) for use in power generation.40 Agricultural and forest waste also contribute to the state’s net electricity generation. Wood and wood waste from paper and pulp mills are used to generate electricity.41 Most of the wood-fueled biomass power plants are in the more heavily forested northern part of Wisconsin.42,43 The state has nine wood pellet plants that use hardwood, softwood, or paper waste to manufacture fuel-grade wood pellets that can be used for power generation or for heating.44,45 Almost 1 in 25 Wisconsin households heat with wood.46
Wind supplies almost one-third of Wisconsin’s renewable electricity generation, which is about 3% of the state’s total net generation.47 Wisconsin’s onshore wind energy resource is modest, with the greatest wind energy potential in the east along Lake Michigan and in isolated areas in the western part of the state. Most of the state’s wind farms are located in eastern and southern Wisconsin.48,49 Additional wind resource potential exists offshore in the Wisconsin portion of Lake Michigan.50 Wisconsin also has a small amount of electricity generation from solar resources. Almost two-thirds of the solar power generation in the state is at distributed (customer-sited, small-scale) solar photovoltaic (PV) facilities with less than 1 megawatt of capacity.51 In 2016, the state had two utility-scale solar facilities in operation, both in southern Wisconsin. Utility-scale generators have capacities equal to or greater than 1 megawatt of power. By the end of 2018, there were 15 utility-scale solar PV facilities in the state.52,53,54 However, solar energy contributed less than 0.2% to the state’s net electricity generation in 2018.55
The Report from Geological Survey of Finland
When this series was begun, we were not aware of the report “Oil from a Critical Raw Material Perspective,” which had been published by the Geological Survey of Finland in late December, 2019, but were relying upon Dennis Coyne’s “World Oil Shock Model” which pre-dated the Finland study by three months. The fact that none of the Finland study contradicts Coyne’s model, but instead, buttresses it strongly, gives us confidence to proceed with this Part II.
The Geological Survey identifies the “plateau” of global oil production of 2005-2006 as a major causal factor in the Global Financial Crisis (GFC) that beset the USA in 2008-2009. Their report states:
“Starting in January 2005, all commodity prices that the World Bank track to monitor the industrial ecosystem (base metals, precious metals, oil, gas and coal) blew out in an unprecedented bubble. The second worst economic correction in history, The Global Financial Crisis (GFC) in 2008, was not enough to resolve the underlying fundamental issues. After the GFC, the volatility in commodity price continued
This report makes the case that the GFC was created as the entire industrial ecosystem was put under unprecedented stress, where the weakest link broke. That weakest link was in the financial markets. The strain that created this unprecedented stress, was triggered by the global oil production plateauing. This made the oil market in elastic in form. This is postulated to have happened because the Saudi Arabian oil production was unable to increase production in January 2005, despite a significant increase of operating rig count. If further analysis supports this hypothesis, then the GFC was created by a chain reaction that had its origins in the oil market. Due to our dependence on oil, it may be the primary, or master raw resource.”
How did Wisconsin respond to the Great Recession and Global Financial Crisis?
The answer to that question is: Not well. Recall that the recovery from the crash of the financial markets coincided with and overlaid the introduction of the Affordable Care Act/Obamacare in the Congress, which also coincided with the rise of the “Taxed Enough Already” movement, the so-called “TEA Party.” One Wisconsinite opined that “The Tea Party (Taxed Enough already) came in response to Pres. Barack Obama’s mortgage relief plan. It faded cause they tried to make (the mostly drunk) Palin the de-facto leader. The consequences of stopping Obama prevented homeowners from receiving help gushed trillions into banks and depriving homeowners of relief. The bottom line is that every time they complain about taxes they give more $$$ to the 1%.” 
In hindsight, this movement can be seen as a pure reaction to the first black president, who was not just proposing some minor legislative measures, but a complete overhaul in the health-care system. The fact that the ACA was largely written by, and very favorable to, the very large corporations in charge of the nation’s medical care system, seemed to have been lost on the people holding rallies with extreme racist caricatures of the new president, with absurd messages scrawled upon them.
In Wisconsin, the “Tea Party” had been stood up primarily by the Brothers Koch, themselves among the wealthiest owners of among the wealthiest corporations in the nation. So these petroleum moguls had motivated a small political army to do battle with the moguls of the medical care industries—big pharma, big hospital, and most importantly, big insurance, the proponents of “Obamacare.” A very bizarre political scene, was Wisconsin 2009-2011. In Wisconsin, this “TEA Party” became a really big deal—enough of a big deal that it caused the entire State Legislature to shift, along with the Governor’s Office, to an all-GOP government. And this was not just any all-GOP government; it was a vehemently partisan and extremist (“Tea Party”) GOP government that was inaugurated in January 2011.
“”Wisconsin is the model”:“Wisconsin is the model”: Grover Norquist’s Tea Party scheme to crush his union enemies”
The very first major policy move made by the new Norquist-Bradley Foundation governor was the Act 10 legislation abolishing union bargaining rights for public employees, and requiring public employee unions to re-certify their union status annually. Huge changes to the downside for public employees were made to the benefits programs. Bargaining would be for wages only, and those limited just to the “official” cost of living increases. The result was a surprisingly large public response that became known as the “Wisconsin Uprisiing,” where as many as 100,000 people descended on Madison, WI and the Capitol Rotunda was filled for days on end with protestors. The Democratic members of the State Senate left the state in protest. In the end, the Norquist-Bradley forces won the battle, and the uprising was called off, in favor of sending activists back to their home towns to conduct recall
The “Wisconsin Uprising” brought up to 100,000 people to the Capitol on its best days.
Act 10 was sold as a “budget repair” bill but it was in the Act 32 budget bill where the damage to Wisconsin’s future resiliency was begun to be enacted. Specifically, the 2011 budget bill Act 32 stripped out Regional Transit Authorities from the State Statutes—which, it should be noted, had only been enabled in the Statutes in the year 2009. So, a two-year window of opportunity to get started on a mode of transportation which might have some chance at successfully weathering future shortfalls in U.S. And global petroleum production.Let’s examine some of the corporate syndicates/lobbies which might be called “Petrophilic” interests who might benefit from denying mass transportation to flourish in Wisconsin.
Among the most important election-buying organizations in Wisconsin would be the one you’d expect to advance the interests of the petroleum and natural gas industries: Americans for Prosperity. Wisconsin Democracy Campaign reports in their profile in Hijacking Election 2018: Americans for Prosperity Independent Expenditure Committee:
This is a group created in 2003 by David and Charles Koch, the billionaire owners of Koch Industries and Wisconsin-based papermaker Georgia-Pacific. Americans for Prosperity, which generally sponsors phony issue ads and has refused to disclose how much it raises and spends on Wisconsin elections until now, supports Republican and conservative candidates for federal, state, and local offices around the country. The Democracy Campaign estimates that Americans for Prosperity spent $5.7 million since January 2010 on undisclosed phony issue ads in Wisconsin legislative and statewide elections.
In August, the group announced a $1.8 million ad buy and sponsored a 30-second television ad that claimed Republican Gov. Scott Walker has spent millions on education and that Walker even drew praise in the past from his opponent in the November elections, Democrat Tony Evers.
The group announced a second $1.3 million ad buy in mid-September and sponsored an ad that claimed Wisconsin citizens could not afford Evers because he is open to raising gas taxes to pay for road construction.
In early October, the group announced a $1.5 million ad buy and sponsored an ad that called Evers “a risk we can’t take” because he may increase taxes.
Here we see the “intersectionality” of the Brothers Koch with Grover Norquist’s Americans for Tax Reform organization, centered on the core piece of Republican dogma endlessly deployed in Wisconsin politics: “No more taxes, ever, for any purpose.” Or, in campaign dogma: “Taxes bad, Republicans good.”
An even more important corporate syndicate for the purpose of preventing any change, ever, to the status quo of Wisconsin’s economy, is the Wisconsin Manufacturers and Commerce. Here’s what Wisconsin Democracy Campaign has to say on this organization:
Hijacking Campaign 2018 – Information on Wisconsin Manufacturers & Commerce
Posted: February 14, 2018
Updated: December 12, 2019
Wisconsin Manufacturers & Commerce (WMC) is the state’s largest business organization and one of the most powerful special interest groups in Wisconsin because of its electioneering and lobbying activities.
WMC is among the leaders in spending on outside electioneering activities. Since January 2010, the group secretly raised and spent more than $18.6 million on phony issue ads and independent expenditures. WMC supports Republican and conservative candidates for statewide office and the legislature, generally by sponsoring negative broadcast ads and mailings that smear Democratic candidates.
Generally, WMC would be expected to weigh-in on state legislation and on campaigns for puppeticians sponsoring such legislation preserving the status quo and avoiding any sort of preparation for a post-petroleum protocol in the following industries/commerce groups: Automobile dealers; Gasoline service station operators; Homebuilders in the “Cul de Sac America” model (large, “trophy homes” on large lots far removed from employment centers–”bedroom towns”); Petroleum pipeline contractors and operators; Real-estate development of the urban sprawl type; Renewable energy construction projects; and Road-construction contractors, among others.
You might think that Realtors would be a non-partisan lot, but you would be wrong, at least when considering their main Independent Expenditure committee in Wisconsin elections, again as given by the Wisconsin Democracy Campaign’s Hijacking Election 2018:
Wisconsin Realtors Political Fund “This committee was created by the Wisconsin Realtors Association (WRA) in 2012 as Wisconsin REALTORS Political Fund – 1.91 Account to make independent expenditures in Wisconsin elections. Between 2012 and 2016, the committee spent nearly $700,000 to support Republican legislative candidates and the 2013 reelection of conservative Wisconsin Supreme Court Chief Justice Patience Roggensack. WRA’s political action committee, RPAC Wisconsin, is routinely among the largest PAC contributors in legislative and statewide elections…The last week of September the organization reported spending over $200,000 on canvassing, printing and consulting fees to support of Republican incumbent Roger Roth in the 19th Senate District.
The Extreme Difficulty of Transition from Fossil Hydrocarbons (oil and natural gas) to Renewable Energy for Transportation
Having laid out the political barriers to “Green New Deal” proposals to “leave fossil fuels behind” and transition to renewable energy for Wisconsin’s transportation needs, now it’s time to examine the thermodynamic barriers. Clearly, absent any political will at the State level for this urgently-needed transition process, you can see the extreme difficulty in trying to accomplish this in widely-dispersed local government and business group efforts, all of them lacking in the immense sums of money that will clearly be required for the transition. This section will try to paint the size and scope of this “critical raw material” problem for one small-population state in the USA. Feel free to embark on a similar exercise for your state.
In part I we asked, “when oil consumption is forced to decline because of geophysical limits (depletion of resource), rather than job losses, how will THAT leverage into decline in GDP growth and in turn, job losses? In other words, a reversal of leveraging?”
Supposing that Art Berman’s “Dumbass case” scenario for U.S. Fracked petroleum production were to hold true, then there would be a total 52.6% decline in daily U.S. Fracked production, or, assuming U.S. “conventional” oil held steady at about 5 million barrels a day, a 34.5% decline in total daily U.S. Oil production over the 15-year period, 2025-2040, which is the period most talked about in terms of (governmental) policy-action on climate change for example. This negative 2.3% annual oil production/consumption growth rate (in linear terms) could potentially translate to an annual GDP drop of -2.3% as well, if the two measurements are correlated 1:1
We are assuming that the drop in U.S. Petroleum consumption would be matched across the global economy, and this is when the U.S. Energy Information Agency drops its cheerleading for “U.S. Energy independence” and becomes instead a cheerleader for OPEC oil production, BRIC oil production (Brazil-Russian-Indian-Chinese) oil production, and “rest-of-world” oil production–asserting that even if U.S. Oil production declines (as it will), then overseas oil production will make up for the entire U.S. Decline.
How the EIA arrives at its optimistic global oil forecasts is really quite simple: They’ll take a line graph of global oil production as it has risen since the end of the Global Financial Crisis and use a little plastic ruler with a pen and simply extend that line of growth out to the far right edge of the timeline they’re covering. So, for example, if they’re covering the next 40 years, then oil production growth will be shown rising out to 2060 A.D. Next 60 years? Rising until 2080 A.D. And so on.
A re-visit to Coyne’s “World Oil Shock Scenarios” graphing is in order, to see this graphing exercise at work: In the graph below, the light green band shown rising positively steadily rightward is the EIA’s “International Energy Outlook” case for world oil production. The perfect application of the plastic ruler and fine green “Sharpie” pen at work In global econometrics modeling.
It’s safe to say that all government energy-policymakers rely on the super-optimistic case scenarios of the EIA in presenting the “steady-as-she-goes” energy policy. Several assumptions are built-in to the government policymakers’ policy:
Ass 1–Even if anthropogenic climate change caused by fossil-fuels combustion were real (it is not, they will assert), the damage to our economy caused by “getting off fossil fuels” would simply be unbearable to the American people. This is Assumption 1.
Ass 2–Even if a transition from fossil to renewable energy sources is desirable (it is not, they will assert), the transition period can extend over many decades, to assure the economy is undamaged (using Assumption 1). This was the basis for the Obama administration’s “all-of-the-above energy” policy, which we now know in hindsight was reliant entirely on the growth of fracked oil and in particular, natural gas for electricity generation.
Now, the whole point of this blog post is taking the “what if EIA is completely out-to-lunch” position, and asking what planners, policy-makers, and lawmakers are doing to prepare the state for a highly probably “oil-shock scenario” that arises out of the forest of fracking derricks tightly packed across a dozen shale fields in the USA?
Here’s what happens when news story writers have been drinking too much of the Fracked Kool-Aid:
Back to reality. If we want to take the worst-case modeling of falling U.S. Energy production, using Art Berman’s “Dumbass Case”, then let’s see what an annual drop of 2.3% in Wisconsin energy usage translates to-
2.3% of the 487 trillion BTUs of energy consumed as petroleum in Wisconsin, most of that for transportation, then the state would be experiencing a loss of 11.1 trillion BTUs per annum, about 2/3 of current “other renewables” energy production in the state. (See the chart at the top of the post). Over a decade, that would mean 111 trillion BTUs per annum would need replacing, or 660% of current “other renewables” production. This assumes that the state were replacing transportation using petroleum (overwhelmingly personal automobiles, increasingly either SUVs or good-sized pickup trucks) with transportation powered by sun or wind.
If the fracking bust, the “dumbass case”, does begin sometime in 2025, then this replacement process would need to be ready-to-go, which would mean the state of Wisconsin has about 60 months time to commence planning, design and build of primarily mass transit built to run on renewable power.
At the same time, the state would be looking at the GDP-loss effects correlated to the fall in petroleum consumption nationwide. Crucially, this means looking at considerable job loss that would tend to extend over many years if the GDP growth rate fails to turn upwards and cross the zero axis. In 2012, Gail Tverberg posted an exercise in forecasting what would happen with U.S. GDP growth if a voluntary program of decreased fossil-fuel use were begun, with the aim of reducing climate effects:
Tverberg continues from above chart:
I used the regression equation in Figure 5 to compute how much yearly economic growth can be expected between 2010 and 2050, if energy consumption drops by 50%. (Calculation: On average, the decline is expected to be (50% ^(1/40)-1) = -1.72%. Plugging this value into the regression formula shown gives -0.59% per year, which is in the range of recession.) In the period 1820 to 2010, there has never been a data point this low, so it is not clear whether the regression line really makes sense applied to decreases in this manner.
In some sense, the difference between -1.72% and -0.59% per year (equal to 1.13%) is the amount of gain in GDP that can be expected from increased energy efficiency and a continued switch to a service economy. While arguments can be made that we will redouble our efforts toward greater efficiency if we have less fuel, any transition to more fuel-efficient vehicles, or more efficient electricity generation, has a cost involved, and uses fuel, so may be less common, rather than more common in the future.
Because a negative 0.6% GDP growth rate has not been sustained over a long period, such as a decade, we have no historical record to see how U.S. society would be doing in a protracted recession. As we can see from our current economic situation, which is billed in all of the mass media as “the best economy ever,” even in the BEE, groups of Americans divided by ideology, sub-class they are in, place on the color line, etc. are at political war with one another. One can only imagine the situation were it true that millions of jobs are being lost annually.
What then can Wisconsin people do in view of an approaching involuntary “de-growth” period? When your state government is paralyzed by intractable partisanship, when decisions are not made on the basis of benefiting the people in the state, but on the basis of maintaining elected officials in power for their whole lives? Where one-fourth of the state believe, and vote, on the idea that anthropogenic climate change is not real, while a much larger proportion do agree with climate science that it is real? Where one-fourth of the people do not think that poor, elderly, disabled, young workers or students “deserve” public transportation, because that would be paid for by taxes, and “all taxes bad; Republicans good.?” How can such a population navigate a future filled with crisis situations?
We think that the people can become our own agents of change. But this will require a completely different approach from the politics of the past. First is a rejection of government policymaking by ideology, by political dogma, by old mental models which never fit the conditions when they were first devised, but now are wildly out of connection with reality. Policymaking must be done based upon evidence, based upon science. If the policy concerns social problems, then evidence from social sciences needs to be relied upon. If policy concerns the natural world, the environment, then evidence from the life sciences needs to be the guide. If policy concerns the physical world, as for example, the geophysics of our energy sources, then evidence from physical sciences such as geophysics and thermodynamics, must be relied upon. In this way we can break our way out of the hyper-partisan politics of the present moment and into the light of some democracy.
We would suggest that this change begin at the level of local politics, which fortunately for Wisconsin, remains non-partisan politics. Communities, school districts, the Counties, should be organizing movements to apply the maximal pressure upon the hyper-partisan State Legislature and bring it under control of the people. The movement to add Amendment 28, overturning “Citizens United” decision by the Supreme Court in early 2010, should be embraced. The “Hijacking of Elections” detailed by Wisconsin Democracy Campaign earlier in the post, has largely been the result of Citizens United. But corporations aren’t people, and money spent on propaganda is not “free speech.” It is corporate purchase of elections. If we proceed in these directions, Then, we might have a shot at preparing for and negotiating the world oil shocks and almost instantaneous changes imposed by nature, upon our human economy.
 Charles A.S. Hall, Jessica G. Lambert, Stephen B. Balogh, “EROI of different fuels and the implications for society” in Energy Policy 64, Jan. 2014, pp. 141-152. Link https://www.sciencedirect.com/science/article/pii/S0301421513003856
 Energy Information Agency “State Profile and Energy Estimates: Profile Analysis updated April 18 ,2019 https://www.eia.gov/state/analysis.php?sid=WI
 “Oil from a Critical Raw Material Perspective”Geologian tutkimuskeskus | Geologiska forskningscentralen | Geological Survey of Finland, Dec. 22, 2019. http://tupa.gtk.fi/raportti/arkisto/70_2019.pdf
 “The Tea Party (Taxed Enough already) came in response to Pres. Barack Obama’s mortgage relief plan. It faded cause they tried to make (the mostly drunk) Palin the de-facto leader. The consequences of stopping Obama prevented homeowners from receiving help gushed trillions into banks and depriving homeowners of relief. The bottom line is that every time they complain about taxes they give more $$$ to the 1%.” Cor Gar, from a facebook group posting.
 Wisconsin Democracy Campaign / Follow the Money / Track Dark Money / Hijacking Campaign 2018. Link:
 Dennis Coyne, “EIA International Energy Outlook 2019 and Oil Shock Model Scenarios,” by Dennis Coyne Posted on 09/27/2019 in Peak Oil Barrel.