The servo, if operated under a steady load, but designed for a small slowly increasing load, is a good example. A flywheel spinning up far below its design tolerances but suffering uneven control and feedback are another. Sudden changes in load, electrical input and stress will each start to put strain on the overall system. If the system is designed for such strain, small amounts of it are acceptable. A petroleum infrastructure is like a mechanical watch in that regard: you need enough winding to ensure continued operation, but getting it actually 'cleaned' for maintenance once in a great while is also necessary. Otherwise the junk builds up, friction increases and no matter how much you wind it, the poor thing stops. Works right up to the last tick!

Iran is performing the strangest form of economic suicide I have witnessed: willful degradation of a 'cash cow' the Nation depends upon so that the cow stops giving milk and then dies. Feeding the poor thing lots *now* will just stop up its guts... while it can still operate it needs a limited increase in grazing and a good, thorough exam. Soon there will be a carcass if that doesn't happen, so you won't even get steaks from it. A 'poison pill' that Iran has already swallowed... the Nation will run for awhile, but less well and it will start grabbing for high-cost solutions, like buying gasoline. And that will start a very nasty downward spiral as the motion stable system begins to slow and the wobble builds up and suddenly falls over, heading to the complete stability of death as it turns and turns and turns on the ground going nowhere, save to a stop.

The overall supply/demand and boom/bust cycle are inter-related, although the longer term trend analysis looking at reserve capacity points to a plateau in current existing supplies of oil as we have known it. Oil shale and oil sands, however, have reached a price point in which the improved technology has brought the extraction price down and the as the market price for oil has trended upwards over time. So, the 'easy to get to' first generation oil reserves are already starting to see replacement by oil sands production in Canada. And as those reserves dwarf anything in the Middle East, they have a longer-term price stabilizing component in them with the limiting factors being: capacity expansion and production capability. One of the early notes of mine on Canada commented on this and the impact this would have in actually capping actual prices at a ceiling when Middle Eastern oil starts to hit its first real stumbles. Chevron, as an example, in 2005 alone invested $70 billion in the oil infrastructure in Canada, mainly Alberta. Canada, itself, has an interesting system of being a welfare regime at the top end, but not having any say over local resources. The central-western provinces of Canada now have a negative unemployment rate and cannot get enough Canadians to relocate there to fill these jobs. Not just in the petro-industry, but across the board for services as well. These provinces are also getting fed up with subsidizing Quebec and a few other provinces, looking to get their money out of the oil revenue stream.

Recent Israeli work on oil shales, which they have an abundance of, is now showing real promise and they do point out that even with their relatively low content oil shale it will be economical to start extracting oil from it. That report also points out that US oil shale has twice the concentation of the typical Israeli oil shale... which is why Montana is doing its first major prospecting to getting an oil shale industry up with the older technology. So the old reserves are running out, slow but sure, but the untapped future reserves will now become economical and start to change the landscape and cash flow from inefficient Middle Eastern regimes to more efficient industrial and manufacturing Nations. That, of course, will be seen as 'oppressive' by some parts of the political sphere...

Subsidies are wrecking the oil system, just as they are relatively useless in the US agricultural system. For the $13 billion the USDA pays for its subsidies and emergency support $0.5 billion is for emergencies. The rest are subsidies, 'price supports' and encouraging farmers not to farm... for all the arguments on 'cheap food in the US' we are also getting an erosion of the basis of farm labor by inefficient companies continuing to use sub-minim wage workers who do not have a part to play in society. Thus the Federal Government is paying for the erosion of National Sovereignty to get us 'cheap food'. Yet, even there, the first realms of automation are starting to be felt, with the Mondavi Vinyards, as an example, is moving towards automated harvesting of wine grapes. Florida has pushed research into robotic pickers with chemical sensors that can tell by the direct analysis of fruit if it is ripe to pick or not. While still clumsy and in prototype stage, the need for this in multiple industries to drive out the cyclic costs of labor are immense. Robotic picking can be continuous, set to specifications for fruit grade and done on a 24 hour a day picking cycle. Further, such robots can be retooled for individual tree/plant maintenance during the year on that same cyclic basis. Add in GPS and wireless and farmers can now tell how much moisture they are getting and vary the harvest so that it is at 'peak' for all parts of the crop.

China is facing a problem of subsidized fuel, a shift to the middle class and yet they still having a huge amount of their population living in rural conditions. Destabilization of its Western provinces by Islamic terrorists is no longer unknown. The Central provinces are facing population decline and economic collapse for the population that remains. Eastern and Southern China are now facing multi-prong threats as the Magic Kingdom of Mr. Kim has stolen food trains from China. China delivers the food 'aid' and North Korea says the trains are part of the package and confiscates them, too. Mr. Kim then turns around and says: You keep feeding my people or I will open my borders. Who would have thought that starving millions would be a political weapon? Finally China is coming face up to the fact that the Rising Sun is returning with modern equipment that makes theirs look antiquated. Japan has put the first of a new set of Aegis class ships out to sea. And with Mr. Kim going atomic, Japan has let it quietly be known they are thinking that option over, too... which, coupled with their existing space rocketry, makes them an instant global power with nuclear tipped ICBMs. China also realizes that if Japan does that, it will have manufacturing capability to turn those out like Toyotas.

All of that while China subsidizes a 1950's base factory system with a few spotlights on high-tech here and there. They run extremely polluting factories and are seeing things like lung cancer in cities go upwards. When a city disappears from satellite due to smog, you know you have a problem. When a yellow, noxious cloud hangs over it continuously, even after rain storms, you have an immense problem. Without a market and societal based feed-back into the industrial base, that base will be non-sustainable.

Cheap gas, oil, and land have led to urban sprawl and decay, which it already had but is now spreading faster. Compress the US history between 1910 and 1960 without the sustainability of industry and you get an idea of the problems China will have. They are also getting this damned thing known as cheap telecom, which is starting to liquidize their social cohesion. Attempting to put a 'Great Firewall' in has proven that you need lots of folks to plug leaks and that some of those folks are none too trustworthy in that job. Even if that were done, the SMS cellphone capability has made distributed messages of pure text to be something easily done at nearly no cost burden at all. Add to that increasing storage capacity, processing power and cameras, and you suddenly have individuals who are their own file servers with autonomous wireless connectivity. Attempting to stop the wired internet has proven impossible *inside* China, as the low cost of computers and storage now makes redundant, off-site, fail-over possible. Pull down one server and two others will pick up at distributed locations. To end this China would have to get rid of *all* computational capability, including cellphones, which now serve as the wireless conduit into the world. To step forward they must let go, to let go is to invite disaster, to stay authoritarian invites overthrow, and to try and buy off the population just speeds the acceptance of modern digital technology which the State is not very adept at handling.

This same scenario is playing itself out in the Middle East in spades. The Iranian 'demographic bomb' is already destabilizing enough without the added petro-insanity. Saudi Arabia has *tried* to ban all picture phones, and failed. Phone dating and exchanging nude and other pictures is now commonplace amongst the younger generation there and the social taboos cannot be enforced via a *firewall*. And as there are too many overland routes for smuggling, just outlawing the picture phones raises the nominal expenditure and puts off buying one for a couple of months. In Iraq the majority of the population now has celllphones, at least one per household if not more. One of the great things going on there is that *everyone* has their own favorite downloads, web sites and such that they share with each other. Even if the insurgents got their wish and *won* they would be face to face with a population that is alien to them. Every day that Iraq holds together is a day further off that a repressive regime can come to power without wiping out a growing percentage of the population. The Iraq we invaded is no longer the Iraq on the ground, and *we* have to face up to that in the West, too. The one bright light of Iraq is the realization that subsidies kill. They are being removed and people are facing up to having to get real jobs to survive. The Kurds, in particular, see the need to transfer to a manufacturing based economy with a strong oil sector... not a strong oil sector and a Socialist State leeching from it. Iraq will turn the corner the day electric meters start to go in on houses.

In many ways I agree with your idea of Iran as Socialist concept, but would also say that they have had a strong anti-technology streak in certain areas. While the 'National Flower of Iraq' is the Satellite Dish, in Iran they are attempting the pure Totalitarian move of limiting all 'net access. Throttle it down and thwart it... which just means other conduits will open and distributed comms will start to increase throughput across all the networks to overcome the localized bottlenecks. The oil industry, however, is retrograde. By actively removing the educational basis for it and the economic understanding of it to fund terrorism, they are going far and beyond even a Soviet concept here... Luddite is more the concept, I think. Just bonkers. Really there is no word to describe it as even the USSR knew it had to re-invest in its oil fields. Its industrial production was junk, but the idea was in the right place. Iran has neither the industrial capacity nor the educational capacity to understand this, now. I actually expect depletion to be reaching levels where it can't increase in amount as actual reserves and ability to pump it from the ground are going down.

Perhaps pre-industrial is what this is? Used more to the concept of 'piece work' rather than industrial integration. Any way you cut it the multiple feedback mechanisms no longer work and a downward spiral will begin within the next year or so, especially if they get put out of OPEC as a reliable supplier. Without steady export output, contracts for the long term start to dry up. If that is not addressed then the oil trade slowly moves to the spot market, where daily fluctuations will destroy any Nation depending upon it.

In the petroleum industry, there are few forms of adding capacity: exploiting new fields, expanding on old fields, rejuvenating old fields. Each of these have overhead time and cost and a multi-year timeline to them. The longest is the new field area, which can be as long as a decade to finally get economic production from a field. It adds yield, but at a higher marginal cost. Expanding old fields is only a 2-5 year timeline, but that is based on the 'knowns' of subsurface configuration and expected reservoir size. This will increase depletion of the field, but has a lower marginal cost and is the easier route to go with, especially on large fields. Rejuvenation starts with the repressurizing scheme, of injecting natural gas *into* the field to raise pressure levels and force oil through the pore space. After that you start to look at some more exotic techniques, each of which cost more to do. The marginal cost is higher than expansion but lower than new field work. While we may view those from the outside as 'chunks', to the industry these are minor and discrete operations towards an operational system. Still, $70 billion by Chevron in Canada is a huge investment and they promise lots more behind them as do the other companies.

Iran is not expanding oil output via new reserves nor by expanding on existing reserves in an amount that is above domestic use. Further, their subsidized use of natural gas puts the cheapest form of rejuvenation in peril. This isn't Socialist... its asinine. Even Socialists *try* to understand industrial production cycles. This? A rare form of seppuku. Take all the regulators and sensors off your servo, feed in a 'dirty' power stream and put a large delay on any control on the system or, no control for balance and see if it can stay in place. Something has got to give. In Iran it will be the refineries which are the most complex part of a complex system. Probably not with a bang, just a sigh of relief that they aren't going to be abused any more.

The Cartels are actually only being set up to meet demand at a given price point. Their goal is to control the price point by their own supply of product. They were much more powerful when they had less competition, but their overall part of global production has been in decline for some years. And they have to be in this wonderful bind of having to either 'cover' for Iran or increase quotas and curse Iran. At some point they will realize that Iran is no longer an 'Exporting' Nation that is reliable. Cartels love reliable environments and seek to manipulate those. Throw a spanner in the works and they seize up and fly apart. The question is: which spanner gets them first? Iran or Canada? My guess is Iran, based on spin-up time for the Canadian fields, and the rate of increase of Iranian problems.

It is very telling that not even Gazprom will touch Iranian production. Of course Russia has been faced with insurgents backed in the Chechen region by both al Qaeda and Iran, so they may be having an internal problem deciding exactly how to treat Iran. If I were into conspiracies, I would almost suspect Putin of encouraging the decline of the Iranian petro-industry to hand the West a long-term problem. China, of course, just wants oil, but even *they* haven't invested in the petro-industry in Iran, which is saying a lot, right there. So much for their 'Russian and Chinese friends' who will give Iran nominal cover so long as they continue to pony up and buy hardware from them. One does wonder if such 'support' will last past the point that Iran can no longer buy anything from them nor pay off its debt....

The analysis at multiple levels is difficult without knowing exact conditions. Iran, internally, is coming apart already as seen by student and worker demonstrations. Older, 19th century, divisions are reappearing *again*, with even a Monarchist faction still there. On a nearby regional basis and global basis the question is: how will Iran collapse? When is now a min/max timeline that I see starting in 2010 or so and ending at 2019, but the instabilities are now too numerous to fix a lower date anymore. From unstable regimes seen in the world prior to this, things rarely go to an extreme and often collapse before that... the American and French revolutions come to mind, while the Russian Revolutions are more towards maximum dissatisfaction being reached. They may try to put the al Qaeda management of savagery approach into play to become a distributed threat, but without a State sponsor... well that puts them on par with al Qaeda's poor rich man's road to Empire. The Persian population of Iran should prove relatively cohesive, but the multiple ethnic minorities at the periphery, those have serious problems some of them now wanting to *be* in Iran to start with.

My basic outlooks on energy independence for the US is in these following posts:

Basic energy independence policy, Review of the Popular Mechanics article, Nanotech to the rescue or not, The Stop-Gap Energy policy for the next 30 years, Dealing with Tom Vilsack and then the algae folks in the comments section .

Behind all of that is the view that the Middle East has nearly plateaued in oil production capability and they are now on a depletion curve over the next 50 years. OPEC has not only gone downwards in market share and power, but also in pure output capacity. While they have 'reserve capacity' that means that if that is used you get increased depletion of the oil fields and a shorter lifespan of them. To milk the cash cow longer, they would like to extend the life of their oil fields at the minimum necessary export amount to get them the maximal cash influx. What they have forgotten is that modern life runs on petro-chemicals and even tiny Nations like so many of the Emirates, are facing increased demand curves at home. Iran has this in spades with a huge population and subsidized fuel - a double-whammy that will get them in the end. Even if China, as I have heard, wants to put in lots of money, they may be faced with the regime actually *removing* Iranian money and depending on Chinese money, and the Chinese are unprepared to be the servants of Iran. Really, though, one Nation cannot hope to fill the multivariate needs of Iran's petro-infrastructure, and I doubt that any amount of Chinese money or skill will do more than steady the plateau or slow the downward spiral. That is at best... at worse it will be money down the drain and a rebellion changing the Nation and deciding not to pay off any debts. Funny how Socialist regimes do that and then get peeved when others do the exact same thing to them.

Venezuela has also gone bonkers. No two ways about it: by taking the socialist route and the anti-technology view towards the petro-economy, Chavez is ruining the entire system. Future projects going on hold or being cancelled are the death knell for a system that requires expansive forward capacity to keep exports stable. Stop running and the treadmill flips you off the end of it. By trying to bribe the population, allow Iran to get a terrorist base of operations and legitimacy in South America, and by buying Soviet and Chinese military hardware, he is using short term-profits to little good long-term effect. Mind you, the USSR actually was able to maintain an oil system that at least *tried* to keep up with domestic demand... and Putin's recent efforts there to take over Western oil capital goods in the way of exploration, well equipment, pipelines and so forth are heading Russia down that same path. On the South American front, the goals of Iran have been clear, even if one only bothers to peruse a half-year's worth of articles at the RFE/RL archive at Globalsecurity. What is happening is the workings of the internetworked Transnational Terrorist system with State sponsorship.

What this results in is increased terrorism and performance of terrorism on a global scale as the entire system of terrorism gets infused with money, goods, personnel and training. Much of what was seen in Lebanon this past summer bears a striking resemblance to how the FARC operate, which then looks like cross-training based on the RFE/RL reports. Iran has been working its way into the narcotics trade and other illegal goods trade in South America, looking for funding sources. It is more than ready to exploit Chavez to use any capital or legitimacy he can give so that the Iranian Foreign Legion #3 - South America, can get up and running as a going concern. Iranian equipment and training, however, will diffuse into the FARC and Shining Path, locally, and from those points back outwards globally into the internetworked terrorist system. One of the very pointed questions I put up on TTLB asks the GOP Leadership: What is the stance of the GOP towards illegal immigrants that will be ethnically hispanic, but aligned with Hezbollah? After the arrests and convictions of Hezbollah agents in the US, that is exactly what we are facing now. And those arrests point to Mexican drug lord contacts, contacts with the Asian Triads, and standard criminal and organized crime contacts. While there is some overlap between the criminal and the terrorist systems, notably FARC and North Korea, they are not one in the same, but separate systems with different global goals. Local concerns have their own goals, of course, but the system itself has a global outlook and that is spread via the common parts of each system.

So, Chavez is not only ruining the Venezuela petro-structure, its economy, and importing tons of cheap military hardware, but also helping Iran put a permanent enclave of terrorists in place to recruit locally and start to intimidate the smaller criminal and terrorist operations, like the Emerald Gangs and smaller narcotics outfits. As a resource, narcotics are far more dependable than oil, and cheaper to get, too. Low overhead, high profit. This is a major long-term destabilizing factor in South America and in the entire Western Hemisphere due to the porous nature of the US borders. Here the US 'bargain' of cheap labor to harvest goods and work in sub-minimum wage packing plants will come back heavily to bite us as that bargain will now start to have Hezbollah infiltration along with the unchecked illegals. The US is giving away National Sovereignty for cheap food and that is a recipe for disaster.

In the Middle East, so long as there is oil flow and relatively easy profits to be had, terrorism will continue onwards. The chilling part of that is the Western ability to produce cheap goods now means that terrorism can be supported by less money *and* be more effective. This strange notion of 'cheap goods' leading to freedom seems to have the contrary effect of arming the enemies of freedom and letting them operate in a more deadly fashion as time goes on. With that said within 15-20 years, the Middle East will no longer be a large minority supplier of crude oil, their global output is dropping in percentage terms as Canada starts to enter the market. Similarly Israel and the US will start to exploit oil shales and steady out demand curves over the long haul as *mining* is far more dependable than sub-surface structure analysis for oil and gas exploration. At some point the US Continental shelf will be opened to such exploration no matter how much the environmentalists squawk: the environmentalists have had three long decades to 'put up or shut up' about renewables. Their 'put up' time is nearly over and their 'shut up' time is coming. Americans will not stand for a decreased standard of living to 'save' shore birds when the companies doing such work have not seen a major spill from an oil platform in decades. A proven safety record is hard to beat. A move to nuclear power is all to the good and third and fourth generation nuclear facilities do not operate in a metastable manner requiring constant oversight. The best of pebblebed designs will shutdown if containment is breached due to the denser nature of the air vice their standard coolant. The large 'nuclear batteries' that some companies are proposing are completely self-contained and sealed with set automatic control systems and sub-critical mass elements that cannot even undergo the 'China Syndrome'.

All of that spells a marginalization of the Middle East for importance in the world, increased repression, increased terrorism and strikes against the affluent Nations for 'exploiting' them and for 'not taking the path to virtue'. Only once supply and demand curves near each other will the Middle Eastern State and rich individuals stop being able to fund terrorists. Smaller Emirates realize this and are moving into service economies: banking, trade and the such. Iraq realizes this and the long term goal is to get a manufacturing economy in place for high-skill jobs and long term increasing profits. That latter is 15 years away, at least, but the education cycle for it is already starting and the Kurds point the way towards that future.

Iraq, for all of being a desert climate today, was a lush grassland 5-6,000 years ago. The Israelite description of the Garden of Eden and the lush lands of the two rivers is modern day Iraq. The climate changed, civilizations fell and folks moved around. The soil basis and rainfall basis are gone for that sort of agriculture in Iraq, but the Israeli's have shown the way forward with plant-drip dryland irrigation techniques that yield decent crops. Syria has been trying 1960's style 'Green Revolution' concepts, but lack the water basis for that and remain in some troubles due to that. The smaller Emirates will live quite well on imports and have a cash flow, due to services, that will allow that to continue even once the oil runs out. Iran is another story, and their agricultural sector was a bright spot back in the 1960's, but that era is long dead. Recovery of an agricultural sector in Iran within the next 20 years is critical for their population so as to have the majority of the population fed by home grown goods or via a trade system. Iraq is now a net *exporter* of agricultural goods and is taking up its role along the riverine areas of becoming the 'bread basket of the Middle East'. An expansive use of dryland agriculture will be necessary for the long haul in the Middle East. Iraq should make it, and was saved in time to not only recover but get a robust system in place. Iran is dicey, and will require help from Iraq and Afghanistan to recover its agricultural industries and get them into the modern era.

If Iran implodes in the next 5-10 years, all bets for the region are 'off'. The fragmentation of Iran would be just as disasterous as that of Iraq if it happens soon. My articles on that situation in overview are addressing the tribal nature of Iraq, but is applicable across the entire Middle East, save Israel. Even Turkey is not immune from this breakdown. The closest long-term historical analogy is that of The Balkans, save they had coherent Nation States bounding them to stop the ethnic/religious/cultural divisions from splintering Europe. There are NO such bulwarks in the Middle East, thus this analogy spreads from Sinai to India, the Empty Quarter to Russia. Getting Iraq into a coherent Nation State is critical to stop that splintering and fracturing and remove them as long term faultlines of instability in the Middle East. Long term peace in that region depends upon that solution being applied over and over throughout the region. The reason that is something I see as a solution, is that it has worked before the last time religious sects went after each other. The incoherence of Islam is a main sticking point, but even without that a 'place-by-place' solution can be done but only if that Geographic Center of the Middle East has come to terms with itself. That place is Iraq. Everything of importance on the human side of the equation runs right through there. Quite a lot of commerce, transport and communications, too. All of that is necessary to a vital region and without that there will be no peace (although stability is another and only somewhat related question) there nor globally.

The last time America ran we got stuck with a huge death toll from those who depended upon us, degradation of National affinity, and a route seen to bring the United States down. In point of fact we got stuck with problems that are *not* amenable to Nation State solutions of the 20th century - if they had been we wouldn't have them. Even with some relatively coherent Nations in the Middle East, the 20th century has re-formulated pre-20th century warfare into something that Nation States gave up as warfare... all save one... as those means to fight those kinds of wars are enshrined in the Constitution, only the People of the United States may take them away. There is a State based component in this, and providing semi-capable and freer opportunities to live will help to finally curb Nation State terrorism. The other kind, the non-Nation State side which got the Soviets out of Afghanistan, is not affected by that. To do that will require the most radical altering of any Nation, that is the US actually embracing the ideals it set forth and recognizing that in an era where individuals can be a mass destructive threat, so it is only individuals who can fight those wars.

That I do not see happening any time soon.

And the world is at peril because of that oversight and the unwillingness of a Free People to embrace their Freedom.

This is a long war and the military of the United States can win wars and topple States. But only the People taking up their rightful responsibilities to *fight*, as we have set down in our Constitution, can *win this war*.

The young Republic of the 19th century could easily have coped with this and thrived.

What we have today cannot.

It is pessimistic, but also based on how these systems operate. The feedback mechanism is in place, just not engaged in the way set forth for it to be applied. Our survival depends upon it. And our willingness to take up that old cry of: "Give me Liberty. Or give me Death."

For that is the choice we are left with in the end.

Cross Posted at Power and Control