FACING DAMAGING SCARCITY LEVELS: THE NEED TO PREPARE
Resource conflicts have been documented for centuries. Historical sieges on towns or fortified centers of political and military power would often test the battered adversary’s limit to remain self-sufficient and provide sufficient food and potables for the inhabitants, in order to maintain their stand. Cutting off supply lines, water aqueducts, or poisoning basins or wells by belligerents were part of a strategy for defeating an enemy forced into a mostly defensive posture behind fortifications and walls. The common wisdom forecasts that it’s wise to always retain a rate of spared “back-up” assets and resources when society experiences critical shocks. This article examines the current agenda for strategic reserves in two areas: energy and food, essential to sustain human activity. First follows a treatise on transportable liquid energy deposits within NATO compared to other major proven reserves in the world. What are the dangers of the U.S. forfeiting on those reserves by stripping away volumes to master the federal budget?
Then we turn the attention on the lack of a coherent longer-term agenda for food bank surpluses with safe and nutritional ‘substitute’ food capabilities. In light of past market shocks (crop / food production windfalls and volatilities in international energy provision) leading OECD economies have to stop pretending that current crisis prevention / response measures are fair enough. If they do not act to substantially constrain predicted systemic risks, unchecked energy and crop demand vulnerabilities can spiral out of control.
Just like military preparedness is geared at controlling risks, there is a need for larger security architectures like NATO to envisage an effective hedging agenda against energy and nutritional supply depletions / scarceness which impair the recovery rate in a future conflation of multiple crises. At the risk of harvesting criticism due to a so-called ‘pessimistic take’ on an ‘improbable worst-case scenario crisis’, the author contends that credible, professional foresight studies on energy and food demand evolutions clearly warrant the collective need to upscale the management of ‘strategic reserves’. NATO already possesses infrastructure and know-how to build excess liquid fuel repositories and could plug into global Food Bank networks (logistics, storage capacity, emergency “replenishment units”). Unpredictability further distorts the sense of political urgency to reduce vulnerabilities in the face of highly destabilizing food and energy security risks. This sort of blindness and misunderstanding has to be corrected.
WE OVERESTIMATE OUR PREPAREDNESS IF WE DOWNPLAY THE NEED FOR ADEQUATE ‘SHOCK-ABSORBING’ CONTINGENCY RESERVES
In modern-day conflict, often more unconventional and more asymmetric in nature, having sufficient reserves and back-up (eco)systems still remain as relevant as ever. The United States military apparatus, with its near-global reach, has developed into the planning, maintenance and implementation of “forward deployment”. This relies on relatively stable (as in: reliable), adaptable and resilient supply chains and Command and Control to safeguard operational stability.
Various institutional, think tank and private studies are published on a quasi annual basis, outlining strategic predictions about the nature and evolution of future conflicts. In large terms they concur about a real potential of simultaneously emanating effects of climate change, mass migration pressures (and border control / border security implications), as well as conflict over the distribution and access to natural resources and logistical ‘lifelines’. Allowing free transit through strategic passageways are well known: the Strait of Malacca, as well as Persian Gulf, Suez canal, Strait of Gibraltar and Bosporus are important nodes in a global system of ‘flows’. The global, interdependent trade and transit of elementary resources warrants ‘securitization’ as a means to uphold the liberal economical world order.
The Enhanced Forward Presence is a suitable example of the Alliance’s push for forward-deployed military assets to mount a credible, solid deterrence to an unpredictable, potentially very disruptive ‘threatscape’. But given the complex character of future conflict and warfare, the armed forces shall not play an exclusive role in confronting those challenges: also civil society, the business community, religious and charitable organizations will need to step in and do their part. But to what degree do they understand the vital importance of local or forward-deployed strategic stocks / repositories?
Can civilian actors in an expedient-consumption pattern, adopt a risk management strategy bent on withholding (quasi-)permanent auxiliary stockpiles and required resources (e.g. emergency generators) when crisis situations create steep shortages and restrictions of transit (e.g. blockades, access denial by marauding or criminal groups)? In terms of locking-in fall-back options for resource security, proximity and fidelity of use/service assurance are key.
MEET NSPO, THE NATO ALLIANCE’S “OIL INVENTORY CONTINUITY MANAGER”
The argument implies that regional and community-level provisional surpluses (conserved and bolstered for worst-case scenarios) will matter more than ever. The more scaled and diversified these auxiliary life-support assets are, in conjunction with proper preparedness and advanced training, the shorter the recovery phase and changes to “reboot” to a favorable, stable situation with replenishment capacities. The question that has to be asked: is it acceptable to shrink and (close to) forfeit on reliable, adequate fuel reserves or rely on minimally provisioned food banks in the face of ‘low-probability high-impact’ threats? Cognitive bias on future challenges and transformations to the energy market and food technologies, and a robust tendency to renounce the likelihood of dramatic security doomsday scenarios in Western society further stymies necessary action on the issue.
Essential self-supporting functions could have a more favorable rate of regeneration if a more intricate understanding and appreciation for hoarding strategic ‘counter-crisis preparedness’ reserves was shared amongst key OECD economies and market drivers.
Both practitioners and analysts of large-scale disaster responses understand the make-or-break role of relatively easily accessible or transported energy resources. In cases of either chronic breakdowns or permanent blackouts of electricity-generating compounds, the groups most able to overcome the shock(s), stabilize and restart societal and economical functions are those with better access to reserve power sources.
At NATO, strategic resource planning began as early as the 1950ies. Today the European allies of NATO benefit from at least a ‘minimal’ permanent petroleum storage capacity of over 1 million cubic meters. These provisions are made possible through the extensive NATO Central European Pipeline System (CEPS), which is co-governed by a programme board of the NATO Support and Procurement Organisation (NSPO). Spanning across Belgium, France, Germany, Luxemburg and the Netherlands, CEPS and the larger NATO Pipeline System is a most useful infrastructure and vital “fall-back” system that serves a distinct strategic advantage in case of crisis or armed conflict. The United States still maintains some 700 million barrels of crude stored in underground caverns and caves on four sites in Texas and Louisiana, a permanent reserve built up and conserved since 1977. In relation to the U.S. domestic consumption pattern, this Strategic Petroleum Reserve (SPR) can practically absorb a total production windfall of crude oil during at least 60 days. Whereas the SPR represents a mere 1,456% of the total proven oil reserves of the United States (480 billion barrels of crude), it provides a readily-available contingency resource and relative advantage to withstand heavy supply interruptions and market price shocks, temporarily reducing vulnerability of an important segment of the overall energy security layer. No other oil-producing state owns or operates a ‘contingency’ stockpile of fuel of that size as the U.S. does.
GLOBAL ENERGY OUTLOOKS: RACING TO KEEP UP WITH DEMAND, BUT NOT SET ASIDE CONTINGENCY SAVINGS?
Yet in mid-2017 a debate ensued within the U.S. administration as some argue to stop clinging onto this contingency reserve and to gradually release volumes into the general consumption cycle. Congress had instructed the Energy Department to release 190 million barrels over the past years in order to salvage shortages in the federal budget, though the House Representatives did not move to ask of the agency to compensate for stock deduction. More SPR ‘batch auctions’ are scheduled in the future (without compensating replenishments), effectively making the largest contributing NATO partner more vulnerable to price shocks. Should U.S. legislators further condone a trend to chronically siphon more quantities away and keep downsizing the SPR, that will unnecessarily leave their country’s national security more exposed. It is unsurprisingly a phenomenon of short-sighted policy choices in Washington setting a burden on its own and NATO’s strategic resilience – and that is unacceptable considering the nature and interrelated complexity of the current threatscape.
Regardless of certain relative diversification trends in energy production, according to the U.S. Energy Information Administration the global need for liquid fuels (both fossil fuels and liquefied gas) would even increase with up to a projected 1.6 million barrels per day during the next 22 years. Should the abolishment camp for the SPR gain momentum, the NATO Alliance could in the same stroke risk losing a massive contingency stock in the hands of its most ‘strategic resources-affluent’ NATO member. This would indeed turn the issue of the U.S. domestic crude reserve a critical security of supply matter to NATO. Whereas a diverse range of stockades and depots are being maintained and new ones being installed and managed by armed forces, private (civilian) economical actors seem less inclined to bolster such key buffers for major shocks to come. One of the most renowned efforts to provide for an ‘Ark of Noah’ type of safeguarded stock for our human species to fall back on in case of critical levels of crop failure and/or extreme scarcity of seeds to sustain populations, is the Svalbard Global Seed Vault in the Arctic, which currently stores 1 million seed samples.
The lessons of past oil and gas shocks have not quite led to widespread systemic adjustments to build storages or ‘surplus’ processing or transformation plants. Worldwide, Saudi Arabia (with 266.5 billion metric tons in reserves) and Venezuala’s Orinoco belt (estimated around 300 billion, potentially up to 650 billion barrels of producible oil according to a 2009 survey) consist of the largest ‘empowering’ crude reserves. The third largest being Canada (at 171.5 billion barrels), this effectively makes Canada the largest proven crude oil ‘reservoir’ of all NATO countries.
But neither has extracted just as much out of the ground yet, and both Venezuelan and Saudi reserves are said to be overestimated. Saudi Aramco is equally facing a race to counter the fast decline rate of oil extraction in existing fields, just to not stand still in the coming years of slightly but steadily progressing global demand – mostly from the transportation and petrochemical sectors.
The capitalist market rationale is about generating stable revenue and continued offset. Certain companies might argue that building infrastructure that’s not related to pre-estimated market expansion, is not adding to profitability. However, hoarding up important ‘excess’ reserves (not eligible for liquid consumption) in parallel with commercial suppliers is exactly what stable, Western governments ought to do. Private energy suppliers could be obliged by governments to maintain at all times a ‘contingency reserve’, hence allowing substitute provisions for a certain time to contain pressures to some extent in case of crisis.
The government of Japan seems to understand the future energy threatscape and has won over Saudi Aramco management to allocate nearly 2 million barrels of additional storage capacity, complementing its current 6,25 million barrels in liquid reserves. This way Japan – an important ally of the West – anticipates disaster scenarios by bolstering its capacity to better absorb disruptive emergencies which would dangerously upset energy supplies to the broader region. One would argue that the Japanese mindset is that of gradually engraining critical supply guarantees into the strategic foresight planning effort – but that argument doesn’t quite hold up in light of Japan’s domestic food staple and security of supply as it still imports 61% of consumed calories from abroad. This makes the third largest economy (by nominal GDP) in the world steeply dependent on foreign suppliers in case of grave food pricing or availability shocks.
ADEQUATE LIFE SUPPORT SUPPLIES: AUXILIARY TROVES VS. INSECURITY
Natural shocks such as the cold snap of late February have laid bare the fact that the UK markets are less flexible to absorb shocks compared to the past. Also, price volatility remains on loose screws as long as physical storage capacity is suboptimal. That could give way to a worsening supply crisis, whose impact could get critical when commercial operators suffer continued production bottlenecks and struggle to meet demand.
Whereas that unique, heavily guarded, vault can provide initially for a modest population after a prolonged global crisis, it would make sense to invest in smart and “low-input” farms that can cultivate food stock in case mass shortages loom. State of the art biotech, such as advanced and high-efficiency hydroponic or aquaponic systems and vertical farming, should be more thoroughly tested as fallback solutions to emerging food crises (scarcity shocks).
Looking at one “global” contingency system to heed the needs of populations facing chronic food scarcity – and consequentially hunger – the UN’s World Food Programme, the picture is currently not too encouraging. A 2015 sub-report published by the UK FCO’s ‘Resilience Taskforce’ points out that the WFP “has limited strategic reserves and will need a more comprehensive strategy to protect it from endogenous shocks to ensure that core programs are not interrupted.” The WFP’s high dependency on country donors is a weakness, and it’s equally illustrative of how protective and reluctant nations remain about allocating own funding or resources for distant problems of food scarcity. With food prices continuing to rise steadily since 2006, that does little good in terms of seeking cost-efficiency in food purchases for emergency relief stockpiles. Also the WFP lacks the practice of hedging price risks, acquire options or management agility to hatch more resilient approaches for “food management” as is possible in the private sector.
If a critical supply chain breakdown could easily take out a multinational emergency management programme such as WFP, then how fragile are the national support mechanisms in richer OECD economies where food banks are generally organized and configured to accommodate only a minor percentage of the total population at risk of famine? Slowdowns in agricultural R&D, projected forecasts (for instance by IFPRI) of rising crop deficiencies in the longer term, overall demand pressures and environmental factors will likely further drive commodity prices up. That trend would instigate further obstacles to a robust management of strategic nutritional reserves. The picture will be unique for each locale, but it is time for a tighter nexus amongst the technology-driven farming and crop research, producers, distributors, business investors and key drivers for keeping up auxiliary reserves and food lifelines such as the Global FoodBanking Network (GFN). When talking about absorbing transboundary food shocks, we are talking again about scalability of response and intelligent prepositioning (for optimal distribution). In a severe doomsday-like scenario of widespread crop scarcity, it may not be that silly to fall back on redundant non-commercial systems of horticulture, crop tendering and farming – though it will be heavily dependent on soil quality, irrigation rates, know-how (selection,…), access to technology (fertilizers, anti-fungus products,…), and the self-evident fact that crops require a minimal time to flourish and yield (not allowing ad hoc consumption but only once a growth cycle is complete). Crop and produce cycles are as we all know influenced by various factors prior to harvesting, compared to opening an off-the-shelf can of beans to quench immediate hunger.
NATO AND FOOD BANKS: A NEEDED SECURITY PARTNERSHIP?
This leads us to the actual nexus between food stock / food security and energy strategic reserves, which Dr Magnus Bjarnason rightfully pointed out in NATO Review (2012): “domestic food production and food distribution in the industrialised world is only possible as long as there are abundant energy supplies.” Ironically, intentional overproduction is a necessary vice that works as a broader insurance policy. It comes at an unpleasant cost, but as any other insurance policy will be indispensible when the unimaginable disaster scenario unfolds. This taps to a range of policy decisions to be made, to leverage innovations to optimize storage of energy resources and life-essential food staples, capitalize on crop yield and resiliency know-how, motivate (through incentives) both producers and distributors to redirect excess alimentary repositories of staple foods and freeze-dried edibles with optimal ‘best before’ dates to the Food Bank networks.
One component of the NATO crisis response system ought to expand the capacity and fidelity of alimentary reserves – via the Food Bank networks as partner institutions. This would require additional forward investment planning to immunize secondary chains and surpluses to market price shocks. Beyond the obvious question of ‘just how much overproduction is adequate to sustain alimentary reserves?’, a more ethical question is: which ‘mix’ and volumes of consumables create the most favorable, input-efficient, low-risk, and still nutritious emergency staple food’? Soy versus rice crackers, flatbread, potato cakes? It almost sounds trivial, but in a cataclysmic food shortage context, scalability of vulnerable production matters.
Indeed, it takes brave and visionary starters, willing to upfront large public budgets, to put scalable and productive “emergency farms” in place to accommodate larger urban populations in case of food scarcity shocks. Governments are generally unwilling to take the risk, but hereby plant the seeds of not having a plan B to implement successfully if “the unthinkable”(yet foreseeable) unfolds and causes high levels of existential insecurity among people.
With these considerations in mind, it’s high time to shore up efforts and mainstream forward planning and preparation of strategic contingency reserves on NATO’s agenda without delay.
Disclaimer: The content of this article is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the Youth Atlantic Treaty Association Denmark.