Italy like Ryanair: can it exist with oil over $ 100 per barrel?

Ryanair and the Italian government at odds with each other. This Ryanair advertising shows Italy's ministry for reforms, Mr. Umberto Bossi, in an occasion where he was expressing his disagreement with the words of the Italian national anthem. In the text, the Italian government is accused of "supporting Alitalia's high tariffs", "supporting the frequent Alitalia strikes" and "not caring about the Italian passengers". Ryanair is understandably angry at the preferential treatment that the Italian government is reserving to Alitalia, Italy's national air carrier. Alitalia is in danger of bankruptcy and has been recently saved by a hefty injection of public money.

An airline is a small economic system that uses fuel derived from oil in order to carry on activities that generate profits. If oil is too expensive, profits disappear and, eventually, the system must disappear, too, bankrupted. Low cost airlines have appeared during the period of relatively low oil prices that ensued after the first oil crisis, in the 1980s. Can these airlines exist with oil over $100 per barrel?

A country is larger than an airline but it, too, needs fuel for its economic activities. And, if deficits run too high, countries can go bankrupt as well. Italy's industrial economy had its moment of maximum growth in the 1950s and 1960s; in a period of low and stable oil prices. Can Italy's industry exist with oil prices over $100 per barrel?

At TOD, we have been discussing economic collapse for a long time and Italy may provide for us an interesting test case (although Spain, too, may be in the race). Maybe collapse is too strong a word, but it is clear that things are not going well in Italy. We can find plenty of data about the Italian economy in the excellent blog by Edward Hugh "Italian economy watch" . His posts of the last months read like a horror story. Here are a few examples; first, Italy's inflation:

Here is Italy's industrial production:

And Italy's business confidence:

Here is Italy's GDP:

There are many other chilling data that you can read in Hugh's blog, but let me show you a graph that I made myself about Italy's oil consumption. I am sorry that the captions are in Italian, but I think you understand what it is about: Italy is using less and less oil; a sure sign of a slowing down economy:

And there is much more. For instance, we may give a look to the status of that ancient Italian organization which is the Mafia . On that, I found this graph made by the Italian ministry of interior.

Image from the site of Italy's ministry of interiors , The red line shows mafia-related homicides, the black one all the other crime related homicides.

"Peak Mafia", apparently, took place in 1991. Maybe Mafia methods are becoming gentler, but it might also be that even Mafia is in economic decline. After all, Mafia is an economic organization, although engaged in quite different activities than those of a typical airline. So, it may suffer because of the high oil prices, too. Of course, you might argue that homicides are a diseconomy for mafia and that the less homicides there are, the more efficient the organization is. Could be, but it is also true that number of all violent crimes in Italy seem to be stagnating or in decline, according to the report of the ministry of the interior. Maybe Italian criminals are becoming too poor to buy ammunition.

The economic decline seems also to be taking a toll on the health of the Italians themselves. Life expectancy had been constantly growing in Italy for the past 50 years. But, recently, the trend has stopped (see this article of mine , unfortunately in Italian). Is it due to a natural limit of to the deterioration of the Italian health care system and in general of the quality of life in Italy? We can't say for sure, but the second hypothesis cannot be ruled out.

Now, I am not an economist and I am not qualified to interpret such things as macroeconomic indicators (or mafia trends). But, surely, what we are seeing needs to be explained. I can see two main possible reasons for the decline of the Italian economy. One is demography, the other the high prices of oil. About demography, there is no doubt that Italy is becoming a nation of old people. You can see that in statistics, but you also can get a visual impression of the large number of aged people by walking anywhere in Italy. Old people, of course, don't produce goods and tend to buy less. That would explain, at least in part, the general economic decline of the country.

But, of course, high oil prices are also playing a role; perhaps the most important one. Although some oil and gas are being produced on the national territory, Italy is nearly completely dependent on imports for its energy production. Most of the electric power in the country is made using imported natural gas; Italy has no nuclear plants although it does import nuclear energy from France and Switzerland. Renewable energy exists mainly in the form of hydroelectric plants in the north of the country. Italy has been very slow in moving towards the new renewable technologies: wind and photovoltaics. So, high prices of fossil fuels badly damage an economy that needs to export manufactured products to survive. With high energy prices, Italian products become more expensive and therefore less competitive on the international market. So, exports decline and Italy is less and less able to pay for energy imports. In addition, high oil prices are also adversely affecting tourism; a traditional source of revenue for the Italian economy. With less money available and more expensive energy imports, what ensues is the deadly spiral of economic decline which we are seen in the data.

From here, I could tell you a lot on how Italians are reacting (actually, non-reacting) to the situation. In this hot summer of 2008, Italians are enjoying their vacations. They seem to be worried mainly about sports and convinced that all problems are due to crime, speculation and immigration. Most people seem to believe that the Euro currency is the culprit for the decreasing purchasing power their salaries. Nobody is discussing the possibility of an economic collapse. Whenever some data show that the economy has improved a bit, it is hailed with enthusiasm in the front pages of the newspapers. When the data show that it has gone down (much more often) it is written in small characters in an inner page. Italians may be unpleasantly surprised on coming back from their vacations, this september.

The government of Mr. Berlusconi has been elected a few months ago on the basis of plenty of promises that - as usual for governments - will be hard to maintain. Besides cutting deeply on expenses, including privileges of public employees, the government seems to think that all problems can be solved by a grand plan of public works that includes new nuclear plants, a giant bridge over the strait of Messina, high speed railways, highways, waste incinerators and more. The plan seems to be considered a good idea by most people, including the main opposition parties. But, of course, a lot of energy will be needed to carry out the plan. This energy will have to be imported and someone will have to pay for it. It doesn't really matter whether the money will come from the government or from private funds, it is money that Italy doesn't have. And you know what happens if you keep spending money you don't have.

A slow collapse is a decline and a fast decline is a collapse. Whatever it is, as an Italian citizen, I am seeing it unfolding right around me. At least, I am fortunate enough in not being also an employee in a low cost airline.

Efficiency is the straightest path to Hell.

J. H. Kunstler

I think the UK will be in the running for basket case economy of the decade. My real concern is inflation, now officially over 4% in the UK it is likely running way over 10%. This masks the fact we are in deep recession and deep shit - all courtesy of New Labour Lies.

The government will of course be found out when lower paid workers being offered 2%, can no longer borrow, find they are totally insolvent and strike.

I suspect the mafia ran out of enemies to murder - it looks like a logistic - pretty much like the oil industry running out of oil fields to discover.

At some stage we need to have a debate about efficiency. It is clear that efficiency is very good in some circumstances and dreadful in others.

Was on holiday in Italy a few weeks ago and a couple of things seemed to be noticeable with regard to the economy. The driving on the toll motorways was surprisingly pleasant from Rome to Naples as there were few people driving at or above the speed limit. the majority were at least 10kph within the limit. My landlady took a trip to see family in the south of Italy but made a comment about keeping the air-con off for most of the journey as the fuel consumption got so much worse. The driving on ordinary roads by comparison was hell, as usual, because of all the kamikazee scooter riders.

Italian properties seem to have little heating available for the winter and those premises we went in had the air-conditioning set at a far higher temperature than you find in the USA. An attempt to cut costs?

Around Rome at least the public transport seems well used and intergrated and together with the scooters gives individuals more transport options.

The most surprising thing compared to Greece was the apparent lack of solar water heating. This would seem, in a Mediterranean country, to be the quickest way to cut energy usage in the country in the next few years.

Oddest thing was Sylvester Stallone on the roof of the Vatican, not sure how he helped the economy though.

Yes, Italy is notable among the Mediterranean countries for the lack of heating panels. I saw more panels in Morocco than in Italy. I don't know why; after all we should be "Il Paese del Sole", Sun country. Maybe we think we are too rich to need to heat houses with the sun. Third world things.... And you should see how badly insulated houses are!

As much as you are surprised about the lower degree of air conditioning in Italy than in the US many Europeans are puzzled about the very low AC temperatures in the US - and very high heating temperatures in winter. I've heard that in the US sometimes room temperatures are even lower in summer than in winter - is this true or a legend?

I think here it is not only due to higher electricity prices but also because people simply don't like it (unnatural, dry air, extreme temperature shocks etc.). And whereas in the USA AC is common since decades this is a rather recent phenomenon in Europe, so people are not used to it.

I fight the thermostat battle with my fiancee all the time. She likes it cold in the summer. If I turn the thermostat up, she complains that it feels like a sauna. I guess the plus though is that she likes it cold in the winter too...

One interesting point though. The primary job of AC isn't to reduce the temperature - it is to reduce the humidity, which is easily done by chilling the air. A malfunctioning AC system can chill the air but not enough to reduce the moisture, and this leads to a cold and clammy feeling. I am inclined to think that the thermostat ought not blindly use the temperature as a target, but use some combination of humidity and temperature to reach a certain comfort level. Thus on days when the air is warm and dry the system doesn't have to work so hard.

I've heard that in the US sometimes room temperatures are even lower in summer than in winter - is this true or a legend?
Ya'll got a problem with that? Talk to the gun!

I'm sad to say that this is at least the case in Canada too.
Many a day, in the summer, I'm wearing a long sleeved shirt and long pants - because it's cool - and I'm passing house after house with the A/C running. At home we don't have A/C, don't see a point in A/C because we only get short stretches of hot muggy days now and then. The deck is shaded so eat outside on it and if the upstairs gets too hot to sleep in (>32C) then just move down a floor or three (I'm usually not able to tolerate the basement - it's too much of a temperature shock).

It's individualism and isolationism. People go around sealed in their cars, or they're sealed in their buildings; rarely experiencing the changing temperatures. Offices at work have people wearing winter clothes because the A/C is set so cold. Mostly the problem at work is that there is very poor control of the cooling - so people in some areas wear sweaters in the summer.

Certainly as one gets older one seems less tolerant of colder temperatures and I've been in buildings where
the temperature must have been around 25C in the winter. We keep our home around 20C daytime, 16C nighttime ; although I know people in upstate NY which keep their homes around 16C daytime and they can tolerate that - but it's too cold for my fingers to do work.

I have co-workers who refuse to "freeze in the dark". Translation - they leave all of the lights on in labs that are not being used, leave the heating/AC going full tilt and will not even consider turning off half of the lights. In comparison I never turn on the heating or cooling in my office and replaced the 800W of lighting with a 40W CFL. The fan for heating/cooling uses almost as much power as my home. The lights use as much power as my home. The rooms I manage, each, use around 5x to 10x the power of my home. Around here, anything that I do will swap what 10 of my neighbours and I can do. Paybacks at work are sub 1 year (esp. for things like upgrading computer power supplies to 80Plus spec ones like Antec) for efficiency upgrades while those at home are >15 years. CFLs have only started taking off recently; but I remember them being all over the place in Scotland around 8 years ago. Over there, water heaters hang on a wall and vent into the room; around here an on-demand water heater is 3x more powerful than my furnace and costs thousands to install and have to vent thru a wall (which greatly limits where you can install them). I've got relatives that can shower in 80L of water. That's enough water for me to shower daily for 8 days and wash all of the dishes for my family for those 8 days. This is a relative who is working to build a "green" home - and they'll suck my 19 gallon water heater dry with a single shower.

Energy over here is so friggin' cheap it's amazing. With gasoline around $6US/gallon I still don't bother thinking about using the car - because the cost of purchase, ownership and insurance swamp fuel costs (well I commute by bicycle). Dito for the home. With taxes running almost $3k/yr and energy costs only around $1k/yr there simply isn't any reason to do anything to save energy. My monthly phone bill is nearly 2x my electricity bill. If I had a Blackberry that would make my electricity bill look cheap too.

I hear about homes in the USA that will take $5k/winter to heat (oil) but just can't believe it as my home (15 years old - standard subdivision home) is around $350/winter +$200/yr connection fee for gas). Then again I was just working on a farm and they burn 20 cords of wood per winter for heating/cooking.


"I've heard that in the US sometimes room temperatures are even lower in summer than in winter - is this true or a legend?"

Sometimes it is, but it depends on the individuals. In the Winter I like keep the temperature down and to dress warmer. My friend complains that one of his kids turns the heat up to about 80F (?)28C(?).

In the Summer my problem is with these big office buildings where most of the air is recirculated. It feels stuffy to me. I like windows that open. Also - as you mention - it is a shock if the difference between outside & inside temperatures are too great.

I agree with Euan, I think the UK is in worse shape than other Euro countries:

Italy has a low birth rate [short term pain for permanent gain]

Italy still makes things - precision engineering, furniture, vino etc.

Italy doesn't have to go "cold-turkey" over the free drug of North Sea oil.

Any GDP Italy has, is not made by the "3 card trick" of finance.

It remains to be seen, if the UK finance industry did anything useful for most UK people.

The ultimate cause of the decline of the UK and the US, is the same reason we cannot win an asymmetric [terrorist] war - Spoken English.
Because deviants, freeloaders, dream chasers, nutters with a cause worldwide etc, can understand some English we cannot:

a] Win a conflict with them

b] Apparently stop them coming into our country and multiplying.

This is the prospect foreseen by us here at Forthcoming UK Energy deficit (FCUKED) since 1999.

Euan is harsh on Nu- Labour for present economic mire but the previous administration ignored the need to plan for energy security.

If we had commenced planning in the late 90's by getting ready to build nuclear power, and planned our imports of fossil fuels better we would be far better placed.

This is not wisdom after the event - the facts were staring us in the face after Mad Margaret c losed the coal mines and did her "dash for gas."

It is also nowe becoming evident that nuclear power may have some benefits in terms of lower emissions (if this IS a benefit ?) but it is looking increasingly costly ;

1. Construction costs and the burden of heavy capital investment
2. Uranium costs are rising as the limited resource available becomes , like Peak Oil more evident.
3. Skilled labour to design / erect / commission / run plants has to be competed for - the CBI last year called for doubling of science graduates in 10 years . For the first time for decades the number of students taking A level maths increased this year.

Whilst theer are enough strip mines and paeons happy to dig, for power generation in the First World, coal is looking cheap , gas a dearer and nuclear getting dearer by the day - unless like France you have an installed base and through Cogema a grip on Uranium for the next millennia.

Wind is dearee still and PV even more so - wave energy is still a decade or more away.

Meanwhile it would be interesting to look more closely at Italy as they are so closely tied to Russian sources and secondly Algeria, where the Russkis are spreading their influence dramatically.

It's nearly 2 years since the historic memorandum of understanding was signed between Gazprom and Algeria's state-owned exporter Sonatrach, an agreement which in theory put 69% of Italy's natural gas under the control of a sole distributor.

At the time, EU Energy Commissioner Andris Piebalgs said that "Our worries are the development of the contacts between Russia and Algeria," which he believed was first formative move to create a creeping natural gas cartel. The Gazprom-Sonatrach agreement also made a visible impact on Paolo Scaroni of Eni, who went from warning about the cartel to becoming one of Gazprom's proxies in Europe shortly following this deal. "If you can't beat 'em, join 'em" is the Italian wildcat's strategy.

In April 2007 when Yukos assets were sold off from the bankruopt company 20 % Gazprom's oil subsidiary, Gazprom Neft, which had been owned by Yukos was sold together with companies that hold natural gas field licenses in the Russian Arctic. An Italian joint venture between Eni and Enel, called EniNeftegaz, won with a bid for $5.83 billion.

The deal followed an agreement signed last November between Eni and Gazprom that, broadly, promised the Italian company access to exploration- and production-related, Russian gas assets in exchange for investment opportunities for Gazprom in the consumer side of the natural gas business in Europe.

"This transaction, which is in the context of a fruitful and ongoing relationship between Italy and Russia, underlines the value of our strategic partnership with Gazprom," Paulo Scaroni, the chief executive of Eni, said at the time.

The business methods are the same it is just a different set of Mafia at work - which may account for the decline in home grown Mafia activity. see this

"The head of Italy's Antitrust Authority, Antonio Catricala, has voiced fears over the anti-competitive implications of the proposed cooperation between Eni and Gazprom. Mr Catricala has been quoted as saying that, while the agreement would enable a major new operator to enter the Italian market, the cooperation between Gazprom and Eni would mean that competition would not be injected into the market with this new entry, making the deal disadvantageous from a competition perspective." see

Effectively if one could unwind the somewhat byzantine activities of ENI and Mr Scaroni with Gazprom and associates (which include, amongst many influential Russian based business men, the footballing fan Mr Abramovitch).

Given the continuing saga of Georgia (where it gets very cold in the winter without gas)and the rapid and direct influence of the Russian State and its interests - which can be identified as the same as Gazprom's - and which no - one seems the slightest bit interested - or even aware of, and certainly not concerned shoudl give Europe a great cause for concern. ENI is effectively run by Gazprom / Russia.

Caro Ugo,

From here, I could tell you a lot on how Italians are reacting (actually, non-reacting) to the situation. In this hot summer of 2008, Italians are enjoying their vacations. They seem to be worried mainly about sports and convinced that all problems are due to crime, speculation and immigration. Most people seem to believe that the Euro currency is the culprit for the decreasing purchasing power their salaries. Nobody is discussing the possibility of an economic collapse. Whenever some data show that the economy has improved a bit, it is hailed with enthusiasm in the front pages of the newspapers. When the data show that it has gone down (much more often) it is written in small characters in an inner page. Italians may be unpleasantly surprised on coming back from their vacations, this september.

A most interesting observation indeed!

I myself having been fortunate enough, (or perhaps cursed) to have been brought up with native fluency in three cultures on three continents with family and friends scattered to the farthest corners of the planet, could tell you that you could very easily substitute "Italians" for just about any other nationality and the "Euro" for some other currency without having to change another word in this quote and you would have have perfectly described the situation in those other countries as well. It is not only the Italians who would like to continue with "la dolce far niente".

Well, yes, in the end all countries are more or less the same. Same problems, same virtues and vices; mostly, it is a question of small variations. I have lived in France, in the US and in Japan. Eventually you get the impression that the differences are not so big as it seems at first. But, when the ship sinks, someone has to go down first! We'll see who has this honor.

the government seems to think that all problems can be solved by a grand plan of public works that includes new nuclear plants,

Which replace imported gas with uranium.  Great for the balance of payments.

high speed railways,

Eliminating petroleum burned for aircraft and cars.  Perfect for a post-peak world.

waste incinerators

These can eliminate trash piling up on the streets of major cities and perhaps produce some electricity as well.  They may have their drawbacks, but it's hard to argue that they can't address some pressing problems.

You're absolutely right. It's the textbook keynesian economics response to an economic slowdown. I'm not surprised the left-wing opposition reacted favorably to these announcements, since it's probably in their textbook too.

Yes, but mafia does not control the waste incinerators :)

And no, I'm not kidding.

Landfills and waste disposal is often controlled by controlled crime syndicates in many parts of Italy.

This means that they control where and how the waste is handled.

As long as there isn't direct subsidies for waste burning and building waste incinerators, it makes more economic sense to:

- dump the waste on a football field during nighttime
- bury it under cement in a new construction site
- dump it in rivers or lakes
- just leave it on the streets

So, until indirect subsidies to mafia in form of waste disposal subsidies are started, I don't see very high hopes for waste incineration in Italy.

That or breaking up the mafia and getting non-corrupt officials to handle the business better (good luck with that considering the Italian history in this area).

NIMBY is not the biggest problem in regards to waste incinerators in Italy.

PS Very good suggestions. I agree on all of them. My point was just to show that always the 'sane' option does not get chosen. At least not immediately :)

You made some very good points, SamuM. Indeed, Mafia (or, better said, its Neapolitan incarnation, Camorra) does not control waste incineration. One correction, though: there WAS a subsidy for waste incineration in Italy until last year. It was called CIP6; it was money that should have gone to renewable energy, but with a creative sleight of hand it went mostly to incineration. It was a huge amount of money that went mainly to the North. Mafia is an universal concept, but the real thing - southern Italian - never seemed to be interested in controlling incineration. Apparently, they much preferred to import toxic waste from Northern Europe and dump it in the countryside. I suppose that it gave them higher profits. Mafia or Camorra are very efficient in their own ways. The story is more complex than this and I myself wouldn't be able to unravel all the details. It is an unsolved problem that will need a long time to be solved.

Thank you for the comment. I was not aware of the subsidy. Sigh, there goes that too.

It's not that we don't have our own peculiar problems about waste incineration here in Finland, it's just that being an outsider I have trouble understanding those of Italy.

However, all this doesn't seem to change the fact that regardless of the causes, we are throwing away energy and not necessarily helping the GHG situation that much overall, by burying waste into landfills (methane emissions) when not burning it, but instead buying electricity made from coal :(

Such is the depth of human folly.

Well, incineration is only somewhat more efficient than landfilling with gas recovery. But the available studies clearly show that recycling is much better and re-using is even more. But we tend to choose always the worst available path. The depth of human folly, indeed.


I think you are being a bit too gloomy about this.

Italy uses about 1.75m barrels of oil per day. At 110 US$/barrel, that's about 70 billion US$. The Italian economy is a 2.1 trillion dollars (according to wikipedia) and oil is thus 3.5% of GDP.

As a reference, the US uses 20m barrels a day and has a 14 trillion dollar GDP. That's 5.7%

I think the issue with Italia is its political climate. It seems to be impossible to change anything for the good of the people, because the political system is locked.

Oil is not part of the problem, I think.

You are right that the US lifestyle is enormously more wasteful. But that means, too, that we have less fat to shed. When gasoline prices increase, I can always read in the newspapers instruction on how to save fuel. Drive more slowly, drive gently, use a small car. Well, long ago, in the US, I used to drive an 8 cylinder Ford Torino. Now, then it was so easy to save!! Just get rid of the monster and buy a small car. But, here, I already drive a small car, I drive very slowly and gently.... heck, I am already at the limit. Then, of course, I have solutions: I drive an electric motorcycle powered by the PV panels on my roof. But that is a little too much for most people in Italy - electric vehicles and PV panels are expensive and many people ran out of money to invest in anything. In the end, I do think it is oil; but I may be a bit gloomy, yes...

This is an interesting article - thanks Ugo. It seems that Italy and the UK are vying for first place in the EU for the most complacent, dysfunctional response to our energy crisis. Italy may be in a worse state (for now) because we do still have some FFs remaining in the North Sea. Both countries have craven media dominated by Berlusconi and Murdoch respectively: both failing to provide the populace with meaningful news about important issues that affect them directly - instead they fill people's heads full of trivial nonsense dressed up as "news". Each has compromised their country's democracy by damaging the "feedback loop" between those in power and those they govern, thereby contributing to their countries' utterly inadequate responses to the crisis.

I like the juxtaposition of Italy and Ryanair. One is the canary for the canary? Violent crime (and crime generally, especially burglary)however has also been going down steadily in the UK. The most apparent explanation has been the increasing modernised affluence: we are on the plateau of the Zenith. I note that Italy's GDP grew most years from 2001. Ryanair followed this affluence curve into summer holidays and winter breaks and sporting events. If 100 dollar oil is the turning point for Ryanair's business model, then the same could be said of the national model. Point well made Ugo. (I understand for example British Airways 85 dollar fuel finishes in January 2009, so there seems to be time lag before full impact?)
Perhaps Mafia might play a resurgent future role, maybe in the home repossession and debt collection industry? The post-Soviet model could apply? (Dimitri Orlov is a good 'beach read' if you are still heading off.)
Agree with Euan that UK is not well placed. How much will 'financial services' really be worth?

Yes, Dimitri Orlov is great I have ordered his book, will arrive after beach season, but I read his blog. He has perfectly understood the Russian situation (of course, he is Russian). Italy will have a different kind of reaction to peak oil - every country is different. I agree with Orlov that Russia was structured in ways that made it possible to survive the oil shock better than other countries. Much better than the US; somewhat better than Italy.

I've been rummaging in the history books looking at how various countries coped with the lack of petroleum during World War 2.

Can I ask how civilian Italy coped?

Apparently something like three-quarters of a million wood-fired vehicles were produced on mainland Europe during the war. (For some reason you never see Clint Eastwood attempting to drive one in war films, nor do they appear in UK vintage vehicle rallies).

Sweden converted 70,000 vehicles to wood firing. The French city of Nice installed electric trolleybuses (Italian made I think) in 1942. The Vichy government had a whole department devoted to encouraging 'forest fuel'.

I suspect that Italian cities were well equipped with electric trams, but maybe coal was in short supply too.

For a good read on wood-powered transport ancient and modern see

Any info on relevant Italian historical web sites would be gratefully received,


This is a very interesting question. It is so interesting because Italy had to cope with a lack of fuel not just with the war, but already starting from 1936, the year of the invasion of Ethiopia and of the international sanctions that followed. There are lots of similarities with the case of Iraq: invasion of a less powerful country, sanction, gradual destruction of the economy, loss of military capabilities... In both cases, the great chief continued to play the role of the big bully, without realizing that the power base of the country had been destroyed. So, the Italian army in ww2 couldn't do much better than Saddam's conscripts in 2003.

Apart from that - it came later - from 1936 Italy tried to cope with the lack of fuel and commodities introducing what was called at the time the "Autarchy". It was a program of efficiency and saving in many respects similar to what environmentalists are proposing to do now. So, there was lots of emphasis on Italian "white coal"; hydroelectric power. There was a program of small wind powered water pumps; you can still find a few today (not working) in the countryside. And new agricultural methods, all those little tricks of recycling that are so fashionable nowadays; food, fabric, metals, etc.

Unfortunately, it is nearly impossible to find data on the Italian autarchy on the internet. With the war, it has been classed as another failure of the fascist regime and forgotten. It was a failure, of course, if it was seen in relation to the war. You can't fight a war on the cheap - saving this and that. But it might not have been a failure hadn't the fascists been so stupid in so many other things they did. Too bad, because it would be hugely interesting today to analyze the autarchy period, very likely we could learn something out of that experience.

About your specific questions, yes there were electric trams in all major italian cities. During the war, private cars were prohibitetd, but that made little difference since most transportation was either by rail or horse powered (or human powered). I never heard of wood fired vehicles in ITaly; as far as I know, none existed; but I haven't specifically searched for that.

Thanks for a word to search futher on in the history books.

I think you really mean 'autarky' with a 'k'. There's an interesting pair of words here.

According to my Oxford dictionary Autarky means 'selfsufficiency' from the greek 'arkeo', 'to suffice'.

Autarchy means 'absolute sovereignty' from 'arkho', 'to rule'.

Can any government hope to provide autarkic autarchy?


Good point. In Italian it is "Autarchia", so I had translated as autarchy without too much thinking. I think they meant "self sufficiency" but that could also mean "self rule". Both things seem to come together, after all


Yes, if I remember correctly the TIME/LIFE series of books on World War II has a photograph of a wood burning car. It's the book that has a picture on the cover of Mussolini marching along with a few other people. (The title might be "Italy at War" but I'm not sure.)

Again, if I recall correctly, I think the caption for the car said that it produced a lot of smoke... and depended too much on the availability of wood.

Yes, I too would like to see Clint Eastwood driving one of those.

Right. I found pictures over the web - such cars existed also in Italy. I imagine that they would consume a lot of wood. On the other hand, there were not many cars in Italy in the 1930s

Aren't search engines wonderful!

The Alfa Romeos in this article

certainly set out to celebrate 'autarchia'. They seem to run on almost anything - wood, coke, lignite and alcohol.

The sports car on page 4 would look good in a James Bond film,


Just to note that reduction in crime in UK since peak in 1995 has been 42 percent, but interestingly has been "stable" (small increase) since 2004/2005. Violent crime followed same trajectory.
Did not stop large increase in prison population, however.
Will we be able to afford high prison numbers (ref. to one of Dimitri Orlov's scenarios)?
Some parts of society presumably already experienced peak affluence (and amelioration of social morbidity / crime etc) and will take the hit of negative growth earlier.

Interesting stuff. Whilst Italy has long been seen as the sick man of Europe, I think there are a few encouraging cultural differences between the UK and Italy which may help the Italians in the long term. We have vested interests (planning to move there full time in 2010) so I hope so!

Their attitude to commuting seems to be different to ours. Outside of the major cities, many Italians live very close to their places of work, if not above them and do not have huge commutes.

Ortos and Stufas. This for me was one of the most heartwarming and encouraging signs. Ortos are small-holdings - many people (outside big cities of course) have them, they are tended manually. They have not lost their horticultural knowledge yet. Many people sell produce locally without huge depots being involved. Most restaurants serve local produce only, grill and make pizza over wood fires too. The agriturismo is well established (organic veg b&b)

Stufas (woodburning stoves) are very common in the countryside. Where we are (Le Marche) most houses in villages have vast woodpiles that they spend the summer collecting. The majority of houses, unlike the UK, still have servicable chimneys. We can cook on our stufa out there.

The high price of electricity (we pay 3x what we pay currently in the UK) and a cap at 6KW (should be mandatory in the UK I think) has encouraged a culture of awareness about large KW devices. If we use more than that the lights go off! No buying your way out - you run devices consecutively not concurrently. When we turn on fans - the lights dim! Electric kettles are not common and electric toasters don't really work. Tumble driers are not needed for most of the year. Compare this with the 25KW per day allowance for most houses in the UK.

Also as bottled/tank gas is common rather than mains gas and as it 'runs out'/needs to be refilled there is heightened awareness of price and conservation.

Although very slow on the uptake with solar thermal and photovoltaics, Italy has recently launched grid tiedwind turbine initiatives which are at least a step in the right direction.

Additionally, Italy has some indigenous production, and gets some of its gas from North Africa via direct pipeline (IIRC correctly from oildrum readings). They may not be as beholden to the Russians for gas as the UK is in the future. I believe North African gas is set to peak later than other countries from what I've read.

Happy to be corrected - could be seeing things through rose tinted specs etc

[P.S. also PhD Chemist! :) ]

Well, rose tinted glasses? No, it all depends what are you looking at. Italy has some very good aspects, and some very bad ones. For instance, you are correct in that we are one of the hubs for North African gas, and that is not going to run out so soon. But it is also true that last year there was a serious risk of gas shortage, in winter. And, then, I can hardly understand why some people on top are clamoring so hard for Italy to have her re-gasification plants. Where are we supposed to import natural gas from? If there is a worldwide shortage, where are going the gas tankers to go? Here? Mmmmmm.....

Anyway, I have my orto, my PV panels and a fireplace - and woods at walking distance. The small problem is that not everybody can have a vegetable garden and that if everybody tries to heat houses with wood, well, bad for the woods. Very bad!

A right wing think tank has released a report consigning some of the
UK's major northern cities to history ... well .. hard to say really -
the advice seems to be that they should be effectively abandoned and
that their populations should move South !.

There is no realistic prospect that our regeneration towns and cities can converge with London and the South East. There is, however, a very real prospect of encouraging significant numbers of people to move from those towns to London and the South East.

Apparently it's not going down so well in the regional press:

So utterly daft are its conclusions that it is hard to know where to start in countering them.

“Essentially, the authors argue that cities such as Liverpool are beyond revival and millions of their residents should move to London and the South-East instead.

“The implications of such a mass migration are mind-boggling.

“The infrastructure of London and the South-East can barely cope as it is, and it is hard to see how it could accommodate huge numbers of in-comers from the North."

I guess the right wing think tank has never heard of energy crunch (i.e. they don't read IEA) and do not understand concepts like reruralization.

I don't know what the future will be, but condemning half of a country to be abandoned based on historical projection alone without understanding future uncertainties, well... let's just say it's smacks of arrogance and ideological posturing.

“The infrastructure of London and the South-East can barely cope as it is, and it is hard to see how it could accommodate huge numbers of in-comers from the North."

You've got an issue tailor-made for the BNP; they'll argue that repatriating the inhabitants of Londonistan to their native or ancestral homes will free up plenty of room, and reduce social friction in the bargain.

This, of course, makes it a non-starter.

Although perhaps a little off-topic, I would like to briefly mention an issue to do with the Mediterranean Sea, namely rising sea temperatures. When I visited Sardinia in the late summer of 2006 I was shocked by the water temperature and stagnancy. I am not an expert, but it is clear this will have huge ramifications for countries on the Med. One of those is ecological, with stinging jellyfish overwhelming the sea. This, as many of you probably know, has led to the closing of some beaches along the coast of Spain and Italy in recent years. This year the jellyfish returned to the Tyrrhenian coast. Many of the them feed on fish larvae or the plankton and tiny crustaceans that make up the larvae's staple diet. Algae, presumably caused by a combination of warm waters and effluent released from the coast, has been another persistent problem. Then there is the rise in the ejection of hypersaline water (from desalination plants) and heat waste water into the Med as well, the consequences of which I am unsure. And, of late, there is also an increase in the numbers of refugees washing up on tourist beaches in Italy as well.

Needless to say, none of this is conducive to a healthy fishing industry or sustaining a mass tourism industry that is focussed mainly on coastal holidays. I have visited so many cheap, empty museums with eager and friendly staff in Italy only to face traffic jams when approaching nearby beaches.

To make a long story short, these images should be enough to really worry anyone whose livelihood is directly or indirectly related to the health of the Mediterranean Sea. Look at the dates on which the photos were taken! The combination of inflation, higher fuel costs and degradation of the coastal waters could prove a huge blow to an important industry in Italy.

Thanks for the link to the images on Der Spiegel. It led me to the following priceless exchange from Tuesday's edition, when Spiegel interviewed Nobuo Tanaka, head of the International Energy Agency.

SPIEGEL: Mr. Tanaka, do you know what your organization predicted the price of oil would be in 2010 in a study conducted three years ago?

Tanaka: No, I wasn't in office at the time. Tell me.

SPIEGEL: It was $35 a barrel.

Tanaka: Then we must have been very wrong.

For the rest, the gist of Mr Tanaka's comments seemed to be that a crisis can be more or less simply avoided if OPEC "do their homework" and expand their capacity considerably in order to deliver more oil. He also wants the OPEC producers to build new refineries to handle heavy sour crude - which perhaps suggests that the IEA doesn't expect additional production to consist of light crude.


Italy was marginally ahead of the UK with installed windpower in February 2007

2GW Milestone

I assume you mean that Italian consumers are limited to 6kWh per day, rather than a peak power of 6kW?

This would certainly focus the minds of some UK consumers.

Italy also imports nearly 50 billion kWh of electricity annually from France, compared to the UK that imported 5.2 billion kWh in 2007. (Dukes 1.1.1)

Italian Imports

Italy has not had the security of cheap indigenous oil and gas for the last 30 years, so has had to make the best of what was available. Nor has it had a financial services sector propping up its economy - so the Italians still manufacture and farm.

Despite political instability, I would suggest that Italy is in a better position than the UK to adapt and weather the storm for the next 20 years.


Just to clarify, it is a power limit, not an energy one. At home, my limit is 3 kW - can't use more than that at any given moment, otherwise power will go off. You have to remember that; you can't turn on the oven and the dishwasher at the same time. Don't even think of an electric dryer at home. 3kW max is rather "normal"; 6 kW costs much more. Countryslicker is "rich" by Italian standards :-)

2020 and Ugo - Yes it's 3kw per house at any one time - we have two houses joined together. When it has been measured it is rarely more than 2KW per house though. Our neighbours complain that when we use too much their appliances don't work - I think we are at the end of a spur.

This arrangement (limiting total power use) could easily be implemented NOW in the UK and would stop expensive and indulgent power surges and power borrowing from other grid networks (like EDF) when we all put a kettle on to make tea during ad breaks. (A totally british phenomenon apparently). It's rather more focussing and 'fair' than just hiking prices.


A year ago I asked them a similar question. I am still waiting for their reply.

Half: Good interview, but the interviewer didn't address the 800 pound gorilla, which is "Why are your mistakes always in the same direction?". When you are always low on your price forecasts and always high on your supply forecasts you obviously are not attempting to accurately forecast either. Their big report in November has a 0% likelihood of being an honest attempt to forecast future oil supply for this reason-what it will be is the highest possible supply numbers that can possibly be defended-i.e. the best case scenario. If it is at all a downside surprise, it really means that they basically are agreeing with Baktari's numbers.

What's Greece got going for it on that map pair of Mediteranean temperatures? Is it "water conditioning" it's section? Or perhaps a few Euro under the table to der Spiegel's map-makers?

I also note that today where I work (Ontario, Canada) it is some sort of "promote energy efficiency" day. We were told yesterday that unnecessary lights would be shut off, and the air conditioning setting would be raised. So today, about 1/2 the lights are off on the floor where I work, but I'm FREEZING! I have to go stand out in the sun occasionally to warm up. I think the building managers need a new control system, or perhaps one which actually measures temperature in the space. I bet their control algorithm depends on the heat energy from the lighting.

I live in Sardinia, along the South Coast, and I do not observe exceptional behavior of water temperature or sea environment composition. I believe that the impressive images of Spiegel are more a consequence of a sharp change in color varying the temperature than of a real problem. Probably, such an average 3 C change in temperature between beginning and end of July is common.

I agree with Ugo that in Italy we have an incredibly low number of houses with solar panels. In any case, I believe that things will soon change. Just to start, this September I will fit my house with three 2 square meter solar panels and with a high-efficient wood fireplace, able to heat water. Both sun and wood heated water will be pumped through the house for heating it during winter. In the case of need, also the current methane powered heater will be used. The next step will be to install a 1500 KWh wind turbine on the roof, as we have an average 6 m/sec wind throughout the year, but this will done next year or later.
In any case, I believe that Italy has more chances of other European countries to perform well in an oil crisis, but these chances are dampened by the very bad politic class we have.

I wonder if it is possible for the Med to go Euxenic (sic?) With temperatures that high the dissolved oxygen concentration drops. If enough phosphorus is available, cyanobacterial blooms could eventually deposit enough dead cells for anaerobic decomposition to take place. Anyone know the dissolved oxygen numbers for the Med and the water turnover rate?

And you know what happens if you keep spending money you don't have.

Yeah, you become a presidential candidate or a high ranking member on some house/senate committee. Why doesn't Italy just do what the US does: print money out of thin air and hand it out to the rich, and then hope that the bottom 95% doesnt revolt?

You show a graph of declining oil consumption in Italy and comment:

Italy is using less and less oil; a sure sign of a slowing down economy

I must take issue with this particular comment. This is really an oversimplified analysis as Italian consumption of both coal and natural gas have increased over this same period as seen in the Energy Export Databrowser:

I have no argument with the overall assessment of your excellent article and believe that the energy consumption patterns shown in the graphs above argue only more forcefully that Italy is in for some hardship as access to fossil fuels begins to decline.

I just wanted to clarify that it is overall energy consumption that is important, not just consumption of one type of fuel.

Happy Exploring!

-- Jon

PS -- I'd love to add Italian as one of the supported languages in the databrowser. Any volunteers to help translate the ~35 key words and phrases would be greatly appreciated.

Well, of course, total energy consumption is an important parameter, but that is declining, too, in Italy!! I placed oil alone, because I believe it is a special indicator of the health of an economy. But if you sum up the data that you show in the same units (actually, you only have to sum gas and oil, because coal is negligible), you see that the decline of oil is not compensated by the growth of gas and coal.

At least, this is what I found in a recent report by ENEL at (unfortunately, it is in Italian). Decline of primary energy consumption in Italy from 2006 to 2007: about 1%. I think it is a trend

You are absolutely right. Using the data from the 2008 BP Statistical Review we can get all values in 'million tons oil equivalent'. Here are the results for Italy for the years 2001 - 2007:

Year   2001   2002   2003   2004   2005   2006   2007
Coal   13.7   14.2   15.3   17.1   17.0   17.2   17.5
Oil    92.8   92.9   92.1   89.6   86.7   86.7   83.3
Gas    58.5   58.1   64.1   66.5   71.2   69.7   70.0
Total 165.0  165.2  171.5  173.2  174.9  173.6  170.8

(Making this sort of analysis possible is my next task for the databrowser.)

It appears that Italy's use of fossil fuels peaked in 2005. But this doesn't count nuclear, hydro, solar or wind. Have those sources increased?

-- Jon

From the ENEL data, it seems that renewables are still marginal in the Italian energy mix. As far as I know, traditional hydroelectric power is slightly down, in part due to climate change. PV and wind are, of course, increasing, but they start from such a tiny base that the effect is not noticeable. But electric power has not peaked in Italy; this is due in part to the growth of renewables.

Now, i should post the figures from the ENEL report, but I haven't got the gist of how to do it in the comments.. no... wait... I found that clicking on a button there comes out the right menu..... yuppeee.....

If this figure appears as it should, it shows the total primary energy consumption in Italy, divided by sources. It is in Italian, but I think it is understandable anyway

"PS -- I'd love to add Italian as one of the supported languages"

I can't help with Italian but could probably supply some other languages, e.g. French if this is of any interest. The translations would be done by native speakers but without any knowledge of the topic.

By the way I noticed you have used the US flag for English. On a similar note you might want to use the Mexican flag for Spanish:-)

JonFreise and memmel,

After doing a little bit more research, I wish to add to a discussion that began on another thread last week when someone posted a link to this June 11, 2008 EIA Bulletin:

My intention here is two-fold:

1) To demonstrate that at least some of the information contained in the EIA bulletin is not accurate, and

2) To pose a couple of troubling questions. To wit, could the EIA’s publishing of erroneous data be intentional? What reasons would the EIA have for manipulating data? And why now?

The bulletin makes the following claims:

Natural gas production in the Lower 48 States has seen a large upward shift. After 9 years of no net growth through 2006, an upward trend began that generated 3% growth between first-quarter 2006 and first-quarter 2007, followed by an exceptionally large 9% increase between first-quarter 2007 and first-quarter 2008.


…more than half of the increase in natural gas production between the first quarter of 2007 and the first quarter of 2008 came from Texas, where supplies grew by an exceptionally high 15%.

I stated previously that this last statement is false. After doing a little bit more digging into the EIA methodology, I am even more convinced that the EIA figures are in error.

Here are the EIA figures juxtaposed next to the Texas Railroad Commission figures so you can see yourself how they compare. (I have also included production from the Barnett Shale East Newark Field since I felt there might be some curiosity about that too):

              Texas Natural Gas Production (BCF/day)

Month          EIA Bulletin        Texas RRC          Texas RRC
                (statewide)       (statewide)      (Barnett Shale)
Jan 07             17.64             17.47               2.27
Feb 07             17.82             17.89               2.35
Mar 07             18.37             18.28               2.45
Apr 07             18.26             18.28               2.53
May 07             18.3              18.44               2.62
Jun 07             18.75             18.66               2.70  
Jul 07             18.86             18.67               2.76
Aug 07             19.19             18.77               2.84
Sep 07             19.30             18.73               2.84
Oct 07             19.60             18.75               2.95
Nov 07             19.94             18.75               2.82
Dec 07             20.24             18.55               2.70
Jan 08             20.42             18.21               2.59       
Feb 08             20.80             18.20               2.49
Mar 08             21.05             17.89               2.36  
Apr 08             21.25             17.36               2.26
May 08             21.54             16.58               2.18

The Texas Railroad Commission figures can be found here:

and the EIA figures here:

As you can see, the EIA figures began diverging from Texas Railroad Commission figures beginning in July of last year, and have progressively grown farther apart.

Texas Railroad Commission figures reflect actual production.

EIA figures reflect estimates, calculated using a mathematical model as described here:

In switching from using actual production figures (provided by State agencies) to estimates (based on a sampling of well operators), the EIA offered the following justification:

Currently EIA publishes estimates of natural gas production based on data supplied by or collected from individual State agencies and the Minerals Management Service. Because these production estimates were not considered sufficiently timely or accurate to meet customer needs (to understand and resolve natural gas supply issues) EIA obtained approval from the Office of Management and Budget (OMB) to implement the new survey, EIA-914, “Monthly Natural Gas Production Report,” which collects production data directly from well operators.

And talking of the shortcomings of the old methodology, the EIA goes on to explain:

Current EIA monthly natural gas production estimates generally aren’t available until about 120 days after the close of a report month, and even these estimates do not always accurately depict the levels of production or directions of month-to-month changes.

The Texas Railroad Commission figures I believe to be absolutely correct, based on actual production, derived from reports that are a statutory requirement imposed upon the operators (see$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=16&pt=1&ch=3&rl=54
). I have several overriding royalty interests and I can assure you that one can accurately calculate his royalty payments using the Texas Railroad Commission data. And the Texas Railroad Commission always publishes its monthly production figures within 50 to 55 days following the close of the month.

So in those states like Texas that publish accurate and timely production figures, why does the EIA not use actual production instead of estimates, estimates derived from some arcane mathematical model open to manipulation and error?

Just a couple more observations/questions: It seems the EIA methodology is susceptible to manipulation by operators. The EIA may be collecting data faithfully and applying its model without bias. But since the operator responses are voluntary and not mandatory, as is the case with the production reports required by the Texas Railroad Commission, a handful of large operators could give false data and purposely skew the data.

Also, could these inaccurate EIA reports have any effect on spot and futures prices?

Ugo, I would like to comment on your "peak mafia" hypothesis. An alternative view is that up to year 1989 the mafia had a strong grip on politics, thanks to its tight links with the christian-democrat party ruling the country for 40 years. After the Soviet Union collapse the political situation suddendly became more fluid, and this triggered a phase of enhanced acivity of the mafia, which needed to redefine its control over the territory and over the fluxes of money. The surge in activity, which included the killings of judges Falcone and Borsellino, ended after a few years, when new political links and supporters were found. I will not make any name, because in Italy free speech is far from being guaranteed, but such links are easy to trace. Actually, there are entire books on these topics, for people who want to know. I just wish to stress the fact that mafia is actually killing less when it is feeling stronger, not the opposite.