I promised to prepare a scenario that would lead to “Mad Max”.

 

Normally when I do analysis like this it runs for many pages (I have to justify the money that I get paid). It includes many branches, and provides citations and all sorts of other padding.

 

However, I am not doing this as a paid job; I am doing this for my own benefit, and for the benefit of any readers out there. I suspect you don’t have time to read a 20 page document, I know I don’t have time to write one. It took me a long time to research these thoughts, so what I am writing is just the distilled version. If you want references let me know and I will provide them.

 

Here is a Mad Max scenario in short form:

Step 1.
The US has been waiting patiently for Iran to spin up the last of their Uranium centrifuges. This allows them to destroy all of them at once. Iran completes work and spins them up. The US bombs Iran’s Uranium centrifuges. The amount of kinetic energy in these centrifuges is huge. They go off like small bombs, releasing Uranium Hexafluoride into Iran’s atmosphere.

 

In retaliation, Iran cuts off all oil supplies running through the Straits of Hormuz. As a result, world oil supplies are instantly cut by 40%.

Here in Australia we have our own oil wells, but this only supplies about 60-70% of our oil needs. The rest is imported. We do not import from the Middle East, so in theory we should not experience any major disruptions, but in practice there are three big problems:
1. Experience has shown that every time Middle Eastern oil is disrupted, our oil supply is cut off, as supplies that were intended for us get diverted to countries that are willing to pay for emergency supply contracts.
2. Our oil wells do not provide oil with the ideal “profile” for our needs (a “profile” is the balance of petrol, diesel, etc that the oil delivers). So the terrible truth is this: We do not use our own oil. We export most of it, and import oil that has the correct profile. When oil is cut off, our refineries are forced to use our oil instead of imported oil. But our refineries are not optimised for this. They need time to adapt, and the process is not efficient, even once it gets started. So although we have 70% of our energy needs in oil production, we probably could not refine 70% of our energy needs from our own oil!
3. We have no Strategic Reserve of oil. We only have 2 weeks of oil – mostly in petrol stations and refineries around Australia.

So here in Australia, if 40% of the world’s oil was cut off the crisis would hit almost immediately.

 

Transport would be immediately impacted. Food transport would obviously be given priority, and would thus be only partially impacted.

Within weeks Australian cities will start to run out of fuel. The government will implement their emergency plan for this situation, but it will not be enough to make up for the serious fuel shortfall. Within weeks businesses will be impacted, and within a few months the economy will be impacted.

 

However this, on its own, is not enough to cause a collapse.

 

Jarod Diamond observes in his book “Collapse” that a population collapse is frequently the result of multiple factors hitting at once.

Here in Australia, we have a water problem. We solve this problem by using energy to transport or desalinate our water. Almost every capital city is on the verge of a water crisis, so new projects in these areas are about to be undertaken. Without these projects, entire cities will be left without water. But these projects will require fuel to drive the numerous diesel engines required to build the infrastructure. If energy was in short supply we would be faced with some tough choices. Fuel for food? Or fuel for water? 

 

Most of our electricity comes from coal fired power stations. These power stations require diesel fuel to transport the massive quantities of coal required. They also require huge amounts of fresh water, which is used for cooling and other purposes inside the facilities. We could partially solve our water and fuel problems by turning off our power stations. But that is a decision for the future….

 

Step 2.
The US and allies (including Australia) cannot allow Iran to throttle traffic through the Straits of Hormuz any longer. After threats fail, a massive attack is launched. Iran, as a nation, is utterly expunged from the map in less than two weeks. But before they go under they manage to destroy every well in Iran. In addition:
- Iranian suicide bombers destroy multiple wells in US-controlled Iraq.
- Iran is afraid that an attack by the US might lead to domination of the Middle East by their rivals in Saudi Arabia, so missile and suicide bomb attacks are carried out on oil wells in Saudi Arabia.

 

About 30% of the World’s oil supply is taken off line. Restoration efforts fail to keep pace with ongoing sabotage.

 

Oil production is, by its nature, easy to disrupt and almost impossible to secure because it is so widely distributed. It is almost impossible to guard hundreds of well heads, thousands of kilometres of pipe, and acres of refineries. Suicide bombers from Iran and Iraq continue to destroy pipelines, refineries, oil wells and shipping facilities.

 

In early 2007 the Australian Prime Minister announced that if the water situation did not improve, then water would have to be cut off to our largest food producing areas. In mid 2007 this happens. Food production in Australia is drastically reduced. With fuel in short supply, our ability to import and distribute foreign-sourced food is limited. People start missing meals.

 

In early 2008 it becomes obvious that we simply do not have the fuel required to build water facilities. The government announces that power will be cut off for 4 hours in every 8, in order to conserve water and fuel. It also announces that people will be asked to voluntarily relocate out of the major cities, and into areas with more water. These areas immediately become ghettos of displaced and unemployed people. As food becomes scarcer, these areas become dangerous.

 

By late 2008 water in the cities is not only in short supply, it is unsafe to drink. The lack of power has undermined the water treatment, making the water unsafe without boiling. Without power, boiling water is difficult, and people are burning fences or anything else wood in an effort to make water safe. The cities become essentially unliveable, and people start heading out.  Clashes occur between new arrivals and people already living in ghettos, who will fight for what little they have. Food is not only scarce, distribution is almost impossible, as the people who worked for the trucking companies have been forced out of the city.

 

With power failing, water scarce, food scarce, and fuel in short supply, multiple things have gone wrong at once. Conditions are right for one of Jarod Diamond’s population collapses.

 

The fact that a lethal, human form of Bird Flu is starting to break out in the US does not really matter anymore, Australia is already heading into hell.

 

This is only a scenario. I don’t believe it is the most likely one. It is only used to demonstrate that even a developed nation like Australia could descend into collapse in as little as 18 months. An outbreak of disease would hasten the collapse, but is not actually necessary.

 

So I need to prepare for all possible scenarios.