The Secret Way in Which Our Enemies Use Our Infrastructure

by | published October 4th, 2016

Every year I present a briefing to a select gathering of ambassadors, officials, and executives at Windsor Castle outside London.

These Windsor Energy Consultations take place under a royal charter granted by Queen Elizabeth II.

One of the great traditions of these meetings is a behind-closed-doors briefing for ambassadors from around the world, held in the castle dungeon and intended for frank and open exchanges.

During my 2015 briefing, I revealed a controversial, under-the-radar crisis in global energy infrastructure. Since then, things have only gotten worse…

It’s already feeding into a global wave of violence…

And now, at long last, it’s being taken seriously by the international community.

But it may well be too late…

The World’s Outdated Energy Infrastructure is Crumbling

Over the past several years I’ve talked about the accelerating energy infrastructure threat through a series of public presentations in North America and Europe (including at Windsor). There are two interrelated trends here, both moving in the wrong direction and each growing stronger more quickly than I had feared.

First, the world’s current system for producing or generating, transporting, and distributing energy is showing its age. The initial estimates for how fast this would be replaced, that I ran two years ago, were unfortunately too optimistic.

As of last week – and my most recent revisions – the situations is getting worse.

Almost 65% of all energy infrastructure, which underlies the vast majority of the world’s energy availability, is well beyond its useful life.

Some of it has already effectively collapsed.

And remember, that’s just looking at the current system, which leaves many places on the map with little to no power.

Which brings me to the second trend…

The World’s Population is Outgrowing Energy Investment

The growing global population is pushing up energy demand higher than just about anybody had anticipated.

So in addition to the crumbling of existing infrastructure, there is a quickly growing need for new infrastructure to be added.

The acute consequences of this are already surfacing, but will continue to get worse at least through 2035. Initially, the price tag for all of this was no less than $48 trillion over the next twenty years – or $53 trillion if the 2ºC climate change target in the EU’s “450 Scenario” is adopted.

But it’s now becoming clear that, extrapolating from current indicators, there will be a shortfall of some 40% in funding, according to estimates from the Paris-based International Energy Agency (IEA). As a consequence, the more environmentally-friendly EU approach with the $53 trillion is being pushed off the table.

Even that isn’t helping much.

As for the $48 trillion figure, at least $40 trillion is needed just to ensure the supply of energy. Less than $8 trillion would be available to introduce energy efficiency. Only about 45% could even address energy demand, and even then, the bulk of that would be to maintain present demand levels, not offset new ones arising from a growing global population.

These demand-side concerns also highlight another problem…

Energy Supply Isn’t Keeping Up

Despite the increase in population and demand, power production and generation are actually projected to decline without massive infusions of new capital.

While some of this money will be provided by governments, along with state-controlled and international energy companies, much of that will be of no benefit to large segments of the population.

In fact, the bulk of expected investment will be to prop up present production – that is, to put Band-Aids on declining supply. Well over 55% of all expenditures are in this category; a staggering 80-90% when it comes to crude oil and natural gas.

Even then, the total available investment will be constrained by national and corporate debt. Energy infrastructure may be essential, but it doesn’t provide a readily and directly obtainable return on investment. These investments provide a benefit over time, but are very costly up front.

And that brings me to the most dangerous ramification of the energy infrastructure crisis…

Underinvestment is Creating the Perfect Conditions for Terrorism

When I first presented this aspect at Windsor in 2015, it had an immediate and chilling impact on the distinguished audience.

Then, I shared my calculations according to which the infrastructure shortfall would leave billions of people across the globe without access to regular energy supplies. Some populations would progressively be cut off from energy altogether.

This would result in a rising portion of the world literally living in the dark.

From humanitarian and developmental standpoints, this is a calamity in itself.

But the effect for global security is, if possible, even worse. I told the ambassadors at Windsor this would be a prime recruitment environment for just about any terrorist group that came along.

Not a single ambassador assembled in the dungeon disagreed.


Dr. Moors presenting the Ambassadorial Briefing, the Dungeon, Windsor Castle

The situation is now causing even more concern. As the economic plight of an increasing portion of the world’s population becomes more desperate, a breeding ground is forming.

This may have been initiated by other factors, but the oncoming energy shortfall will accentuate it. The connection is now on the radar screen of international organizations.

In fact, the International Energy Agency (IEA) will hold an initial session on the link between terrorism and energy infrastructure at their Paris headquarters at the end of next week. Marina and I will be in “The City of Lights” at the time.

I’ll let you know exactly what happens, right here in Oil & Energy Investor.

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  1. Malcolm Rawlingson
    October 4th, 2016 at 20:38 | #1

    With nearly 50 years in the energy business Kent I have witnessed the gradual erosion and decay of our infrastructure as a result of politically inspired concept of “kicking the can down the road” to the next Government. Nuclear Power and the entire electrical infrastructure brings these issues into stark focus. The only single large scale, low cost means of generating carbon free electricity has suffered from poor investment and lack of policy direction for decades in many countries. Unfortunately the much touted introduction of wind and solar is proving to be incapable of providing the scale and reliability required of a modern economy… Germany is finding out to its cost. With percentage capacity factors in the low 20’s for wind (even at the best sites) and for solar in the low 40’s for which they are rewarded by heavy politically inspired subsidies (got to be seen to be green) the situation now in the USA is that carbon producing natural gas plants have to operate to be there when the wind and sun is not (most of the time). Nuclear power is undercut and perfectly good plants are being closed because their operators cannot compete with Government subsidized electricity distorting the market.
    The electrical infrastructure in the USA and many other countries that has served us so incredibly well over the last half century is crumbling fast. In China of course where all the smart people are these days nuclear infrastructure is being built as fast as humanly possible with 8 x 1000MW plants scheduled to come on line every year for the next 5 years. Britain too has stupidly allowed its electricity manufacturing business to be (a) controlled by foreign companies (EdF)and (b)allowed its nuclear fleet to degrade to the point that they now must start spending huge sums of money to replace all the nuclear plants they shutdown over the last 10-20 years. All of a sudden there are now power shortages due to pure ineptitude on the part of Britain’s politicians. I hope some of them are at Windsor. They need to hear what you have to say before the lights really do go out.

  2. tina
    October 5th, 2016 at 13:54 | #2

    Wen are they starting all the nuclear facilities???

  3. steve
    October 5th, 2016 at 20:12 | #3

    The real problem with out energy production

  4. bobi Tweddell
    October 8th, 2016 at 14:05 | #4

    The problem with nuclear plants is disposal of the radioactive waste products whose half life is thousands of years. right now, this radioactive waste is being buried. It wont be long until the whole planet is radioactive.

  5. October 11th, 2016 at 15:37 | #5

    Ladies & Gentlemen if the Dinar wud ever get revalued that wud
    help get rid of all of the trillions of dollars that we are in debt

  6. October 11th, 2016 at 15:42 | #6

    Ladies & Gentlemen u also cud burn the radioactive material, and then bury
    the buried radioactive material. okay

  7. Roger McCaslin
    October 13th, 2016 at 21:32 | #7

    We could put the nuclear waste in a rocket and shoot it to the sun!

  8. Karl
    October 14th, 2016 at 14:51 | #8

    We need to reprocess the used uranium to extract the plutonium and use the plutonium to fire reactors. This would help aleviate the coming uranium shortage when China starts up all their reactors and when we finish using up all the uranium stock from dismantled Soviet and US nuclear warheads. But, we can’t wait until we are desperate to do this, as it will take years to set up a facility to do this and to design and build plutonium reactors.

  9. Brian Templeton
    November 12th, 2016 at 23:22 | #9

    There is an alternative to uranium fueled reactors and that would be to develop “Thorium” fueled reactors. Thorium is many times far more abundant in the earth’s crust than uranium, so avoiding any shortage if adapted for wide scale usage, it is also a much safer fuel than uranium to use. The reason why uranium was developed in preference to thorium during the last world war is that the U.S. military powers wanted to build a nuclear bomb and there is no way that thorium can be made to explode. Canada and China have a small joint research program for the development of thorium nuclear power for electricity and heat energy.

  10. Will S.
    November 16th, 2016 at 17:48 | #10

    Your comment regarding Thorium is a good one. There’s a couple of investment opportunities in the Thorium sphere.
    One in the mining of the mineral, & one in the development of fuel rods also using Beryllium to control the reaction and stop a meltdown.
    It’s a pity government ministers don’t appear to know or care about the potential environmental benefits.
    The spent fuel rods are radiation free after 300years, not 3,000 like uranium; and can safely be packed closer together… I also hear they can be used in existing facilities… So win-win.

  11. December 28th, 2016 at 08:33 | #11

    I work at one of those ‘perfectly good nuclear plants’ being shut down 13 years early. California rolling blackouts are what it takes to get people to toss their idiot politicians out. When you flip the switch and the lights DO NOT come on…. it will be too late to recover without unimaginable pain. WAKE UP PEOPLE!!!

  12. The Edge
    December 28th, 2016 at 10:33 | #12

    The solution is actually simple- make the Arms Co’s provide infrastructure instead of piles of useless weapons. They still get paid, but the citizens actually benefit from the huge expenditure.

  13. Johnny a.Bennett
    January 1st, 2017 at 11:39 | #13

    How to invest in your company plus do have any more advice on 2017

  14. Ramesh
    January 1st, 2017 at 12:33 | #14

    China has the best electricity infrastructure as it is all relatively new and better technology. West has to invest now for better next 50?yrs, reduce benefits to retirees , yes !!

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