I happened to watch Michael T. Klare on Book Notes on C-Span this weekend and read his article in Le Monde diplomatique calling for energy self-sufficiency not military escorts for oil and US gas garisons.
FDR knew that energy security and national defense would be intertwined in the future he didn't live to see. Jimmy Cater declared that the free flow of oil in the Persian Gulf was a matter of national security. Ronald Reagan set up CentCom to ensure the access to Middle Eastern oil and control of oil and gas pipelines in Western Asian. Bush 41 invaded Iraq for this purpose and Bush 43 invaded and occupied both Iraq and Afghanistan.
(-11 was a direct result of the building of military bases in Saudi Arabia following the First Gulf War, according to bin Laden's 1998 declaration. Rumsfeld removed the Saudi Bases in 2003 after invading Iraq to appease bin Laden.
Mr. Klare goes on to demonstrate that mixing national security issues with energy security has become too expensive in treasury and lives and actually has backfired in terms of blowback and poor international relations the US is experiencing. In fact, our security and oil security is weaker today by far. He wisely recommends that the US stop digging in outmoded energy avenues, especially in oil.
The End of Oil
Reprinted from Foreign Policy In Focus
At the hastily convened global oil summit in Jeddah, Saudi Arabia on June 28, top officials of producing and consuming nations from around the world attempted to find a combination of solutions that would somehow extricate us from the current crisis over sky-high energy prices. These proposals ranged from increased output by major producers like Saudi Arabia and Kuwait to restrictions on the activities of international oil speculators.
But all were based on the premise that the crisis can be resolved through the right mix of actions, thus restoring an environment of cheap and abundant oil -- a premise that is fundamentally flawed. More and more, the evidence suggests that this is not just a temporary crisis. It is the beginning of the end of the Petroleum Age.
How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.
Dangerous Reliance
Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion's share of our daily petroleum intake. Though the world possesses tens of thousands of operating fields, a mere 116 of them -- each producing more than 100,000 barrels per day -- together account for nearly one-half of total global output. Of these, all but a handful were discovered more than a quarter of a century ago, and most are showing signs of diminished capacity. Indeed, some of the world's largest fields -- including Ghawar in Saudi Arabia, Burgan in Kuwait, Cantarell in Mexico, and Samotlor in Russia – appear to be now in decline or about to become so. The decline of these giant fields matters greatly. Compensating for their lost output will take increased yield at thousands of smaller fields, and there is no evidence that this is even remotely possible.
Signs of decline at the major fields began accumulating this spring when Mexico announced that Cantarell’s output had fallen by 416,000 barrels per day, a 25% reduction over its 2007 output. Though state-owned Pemex was able to boost output at a number of other fields, the decline at Cantarell was so significant that Mexico reported a 9% drop in net oil output for the first quarter of 2008 as against 2007. This is an ominous sign from a country that a year ago was America’s second leading supplier of crude petroleum. A similar sign of alarm came this spring from Russia, until recently the rising star of the oil world. Since last October, output there has fallen about 2%, with no hint of a recovery in sight.
The biggest mystery is the status of Ghawar. This Saudi Arabian field, the world’s biggest by far, accounts for about 7% of global supply. Saudi Arabian officials insist that the field is in good shape and fully capable of sustaining daily output of nearly 5 million barrels for years to come. But many skeptical analysts, including noted Houston investor Matthew Simmons, believe that Ghawar is on its last legs and will soon go into decline. In his 2005 book Twilight in the Desert, Simmons cited technical papers to show that field pressure at Ghawar was being artificially maintained through the heavy use of water injection – a technique that cannot be sustained indefinitely and is usually followed by a rapid plunge in output.
Dire Prognosis
To better gauge the status of the world’s largest fields, the International Energy Agency (IEA), an arm of the Organization of Economic Cooperation and Development, is conducting a survey of the top 400 reservoirs. Although the survey is not due to be published until November, early drafts of the report have been leaked in The Wall Street Journal – and the prognosis is not promising. “The world’s premier energy monitor is preparing a sharp downward revision of its oil-supply forecast,” the Journal reported in May, “a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand."
The most troubling finding in the IEA report, according to those who have seen early drafts, is that the rate of depletion in existing fields like Cantarell, Ghawar, and Burgan is far greater than previously thought. In other words, we are running out of known oil reserves at a greater rate than previously assumed. “This is a dangerous situation,” said Fatih Birol, the IEA’s chief economist, in an interview with the Journal.
We could live with the decline of these great reservoirs if we had some confidence that new reserves were being discovered all the time to replace all those now reaching the end of their productive life. But this is not the case. Despite a sharp increase in spending on exploration and development, the rate of new reserve discovery has been falling steadily for the past 30 years. According to the U.S. Army Corps of Engineers, the last decade in which new discoveries exceeded the rate of extraction from existing fields was the 1980s. Since then we have been consuming more oil than we have been finding – a pattern that can only result, eventually, in the complete exhaustion of the world’s known petroleum reserves.
Few New Finds
Only one giant field has been discovered in the past 25 years – Kashagan in Kazakhstan’s sector of the Caspian Sea – and it has turned out to be an unmitigated disaster. With estimated reserves of 7-13 billion barrels of oil and natural gas liquids, Kashagan was originally expected to come on line in 2005 at a cost of $50 billion. As a result of environmental hazards, government intervention, and disputes among members of the consortium established to operate the field, it is now scheduled to begin pumping oil in 2011 at the earliest at a minimum cost of $135 billion.
Recently the Brazilian state firm Petrobras has announced an equally large discovery in the deep waters of the Atlantic, some 150 miles off the coast of Rio de Janeiro. Although very promising, the Tupi field will take many years to develop and will require the use of more costly and advanced technology than any now in widespread use.
These new discoveries may add one or two million barrels of oil per day to existing output in 2015 and beyond, but by that point output from existing fields is likely to be considerably lower than it is today. Nobody can predict exactly where combined worldwide production will stand at that time. But more and more analysts are coming to the conclusion that the output of conventional (i.e., liquid) petroleum will peak at about 95 million barrels per day in the 2010-2012 time-frame and then begin an irreversible decline. The addition of a few million added barrels from Kashagan or Tupi will not alter this trend.
There is, of course, much talk about other, “unconventional” sources of oil: untapped reserves in Alaskan wilderness areas and America’s outer continental shelf, Canadian tar sands, Rocky Mountain shale rock.
True, these various prospects – if brought to fruition and putting aside the massive costs and environmental risks involved – could add anywhere from a 750,000 barrels a day (in the case of Alaskan oil) to a few million barrels (in the case of the others) to global energy supplies in the years ahead. But, when all is said and done, none of this can stop the inevitable closing of the Petroleum Age.
End of an Era
Consider: In 2030, according to the U.S. Department of Energy, world “liquids” demand is expected to reach 117.6 million barrels per day. Of this amount, unconventional fuels – synthetic liquids derived from tar sands, shale rock, and biofuels – may provide a total of 10.5 million barrels. That leaves 107.1 million to be supplied by conventional petroleum. But what if global oil output has fallen to 60-70% of that amount by 2030, as projected by many analysts? Under those circumstances, no amount of oil from Alaska or the outer continental shelf will be able to save this country (or the rest of the world) from a catastrophic energy crisis.
Some say that any palliative is worth the expense as we head toward certain disaster. But this is not a logical response. Knowing that the age of petroleum is drawing to a close, it is far better to devote our talents and investment dollars on hastening the arrival of its successor, rather than prolonging the agony of oil’s decline.
At this point, we cannot be absolute certain of the dominant energy source of the post-petroleum era. Will it be the Solar Age or the Biofuels Age or the Hydrogen Age? But we do know that it will revolve around some constellation of renewable, climate-friendly, domestically-produced supplies. From now on, America’s top priority in the energy field must be to explore all potential components of this new energy future and move swiftly to develop those with the greatest promise.
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HuffPost's Pick
Having said what I did above in my comment about the Enron loophole and speculation, I am of the opinion that America needs to find other less polluting sources of energy. Peak oil seems to be a reasonable hypothesis. It becomes more expensive to keep drilling in more pristine environmental areas with harder-to-pump oil. My back ground in geology tells me that oil is a finite resource but my background in economics tells me that the prices are being manipulated. Both propositions can be true.
See below for the analysis of just who wanted the Enron Loophole. The investment banks have taken other losses and now want to run up food and energy prices to offset their losses.
"Energy speculation has become a growth industry and it is time for the government to intervene. We need to consider a full range of options to counter rapacious speculation., according to "Rep. John Dingell, D-Mich, Chairman of the Full Committee of the House Energy and Commerce Committee.
The Committee is looking for legislation to curtain index speculation, requiring higher margin (money down) requirements; also position limits for speculators and more disclosure of positions; lastly, prevention of pension funds and investment banks from owning commodities because it raises the risk of losing funds, either from pensions or bank assets.
What the Energy Group lobbied for and ultimately received from its Federal regulator was the breathtaking ability to trade oil contracts and oil derivatives secretly in the over-the-counter (OTC) market, thus avoiding the scrutiny of regulated commodity exchanges, their CFTA regulator, and Congress...the exchange occurred via Comodities Futures Modernization Act (CFMA) and is called the Enron Loophole. "No scrutiny, no regulation, no honesty."
Philbro (a Citibank subsidiary) was represented by Sullivan and Cromwell. Their letter of April 6, 2001 to the Commodities Futures Trading Commission (CFTC), the regulator of oil, and other commodities trading acknowledged that it represented the "Energy Group." Ultimately, Governor Gray Davis was recalled as Goldman Sachs and Morgan Stanley with Enron (which collapsed), Philbro inside of Citigroup, BP Amoco and Koch Industries all jumped on board. This is the "comprehensive energy plan" with Citigroup and Phibro hiring former Enron employees.
The petroleum age is indeed drawing to a close. Pity. We humans are now so gorged with wanton waste our excrement is sugar coated. This is Germany 1939 folks. War,famine,pestilence and death. The four horseman are about to ride. It's like I tell everyone, during WW2 you wouldn't want to be a German or a Russian. But South and Central America got a pass. Guess where I'm headed. And for all you morons who will call me unpatriotic or a rat leaving the ship early I got 2 words for you : who cares.
The oil mania may be coming to an end.
Oil ran up to $143 then fell back.
This suggests that the smartest money is using price spikes to take profits.
This will cause the bubble to explode sooner rather than later.
Hi all,
props to Huffpost for the reprint from Micheal Klare. Good stuff.
Every once in awhile (this is the 2nd time) i will resort to others' headlines- mostly from http://www.theoildrum.com/
But I justify this to better inform my progressive friends on the Huffpost who need as much info as they can handle.
So here it is:
"The conservative IEA appears to be inching ever-closer to the "peak-oil" crowd. Supply simply can"t keep pace with demand " everybody with an oil well has the taps open, but there"s not much left in the keg. Oil fields are aging quicker than free-agent pitchers, and the global oil industry has to run faster just to stay in place.
....Politicians can pick their bogeyman"be it speculators, OPEC, or Democrats. But more and more it seems like the oil conundrum boils down to an age-old truth: Finite supplies can"t meet infinite demands."
We need to get on with it folks. Don't wait to change your living habits. Don't wait to have it shoved down your throat or up your arse.
Thank you Mr. Klare for a good article.
I will vote for politicians who are willing to support efforts to develop alternative energy sources.
It seems a shame that we have to rely on the Japanese to sell us the Prius, and the Spanish company, Iberdrola, to develop wind farms on our own soil. If we develop alternatives to oil, we not only help ourselves, but we might be able to help the rest of the world do the same.
I know this article is about oil but all energy is going to get too expensive to use freely and when energy costs more so does everything else.
You know the coming depression coupled with long term energy crisis will be a rude awakening for we soft, spoiled Americans. Our forefathers that managed to make it thru the depression with almost nothing didn"t need electricity for everything. Most of us can"t heat our homes without electricity no matter what form of heat we use. I for one do not have a fireplace. Sure sounds like a good idea now.
We have already started to see food riots and fuel protests, this is just the beginning. It is easy to point our fingers at the Saudis when they are building artificial islands, movable skyscrapers and snow ski resorts in the middle of a desert. It is also easy to blame the speculators that are busy buying every Ferrari that is made and snapping up 5 Million dollar houses. We can also blame the oil companies that have made more profits in the last couple of years than they did for the entire 100 years prior. And I do blame them but I also blame everyone that sold us on the suburban lifestyle and everyone that is still doing their damndest to keep alternative energies from being widely adopted.
We will have a bloody revolution when the rich hide in massive fortified compounds.
i don't like the phrase "we are running out of oil"
because that's not what peak oil says
oil production fallows a bell curve
so even if we were in terminal decline, we'd still have oil
If all goes according to the Bush plan, oil will be gushing from the Iraqi spigot before November. The occupation of Iraq is just part of the Oil War we are in the midst of. Very clever to have us believe we are fighting for Freedom, or against madmen with WMDs, or whatever the heck else the public will swallow. It's all about oil. Oil companies don't want to wean the US or the rest of the world for that matter off oil. They are a little worried that it won't flow from Iraq fast enough for the election. But they realize that starting a war with Iran will only raise the already too high price... too high because it forces us to look for alternatives and to put into place infrastructure to support the alternatives. So bombing Iran will have to wait for November 4th, or for the next new moon, November 28.
By playing the coming scarcity of oil factoids, we are merely setting ourselves up for a big surprise when 500,000 barrels/day flows out of the Iraqi fields, within the next three months. This will cause the public to refuse to accept the truth of these facts for even longer. Much money is going to be made. Watch for it. And remind yourself by watching this: http://rawstory.com/news/2008/Onion_News_Diebold_already_rigged_election_0227.html
Someday we will run out of oil---And we should prepare for that. To do any less is foolish.
That said, What a great way for the Republicans to win by turning on Iraqi oil and driving prices down a buck or so. Heroic, huh? Coupled with sudden breakthroughs in Mideast peace, newly discovered brotherly love in Iraq and lessening violence (for a week or two...) the Repubs touting their support of the troops with this newly passed bill--Hooah!--and a cure for cancer, and we have a McCain Presidency!
And this oil manipulation is the cornerstone of the whole process! If you think "Good cop--Bad cop" is a mind f*** , then this is the 3 dimensional, time warp/wormhole unified field theory of mind rape.
You need a scorecard just to keep track of the possibilities of these wheels within wheels.
Saudis are bad! No dude, it's OPEC! Really, it's the speculators. No, I think it's peak oil. Uh uh, it's just supply and demand market forces. Think about the geo-political ramifications of all the pieces Bush has in play, and we have the everything needed to game the system, make obscene profits, continue the war, and polarize this country in six different directions!
It's the story of the old Russian diplomat whose reputation for circuitous thinking was legendary. When told of his death, his counterpart in the French Diplomatic corp said, "Yes, he's dead, but what does he really mean by it?"
there are no good alternatives to oil
and certainly not for fossil fuels
it's very unlikely we will be able to prevent the inevitable....
we must learn to make do with less
there is no choice
I read recently that with oil the world can support the 6.5 billion or so people on it. Without oil, the sustainable human population plummets to 1 billion.
World Oil Consumption chart (EIA source):
http://www.eia.doe.gov/emeu/steo/pub/gifs/Fig5.gif
(from http://www.eia.doe.gov/emeu/steo/pub/contents.html)
Oil price chart:
http://futures.tradingcharts.com/chart/CO/M
Compare the rate of increase of the price of oil, and the percentage of increase of the demand.
God, there is oil everywhere.
i need to type more slowly
oil shale is source rock that didn't go below the oil window
tar sands are an old oil field that's now at or near the surface
i should also mention..., you need source rock
when porous, organic rich rock, sinks into the "oil window," it cracks into oil.
if it goes below the oil window, then it crack again into natural gas
the depth of the oil window changes a little from location to location.
an example of source rock is oil shale. Our oil shale would crack into oil in geologic time if it were under the oil window thus giving us much more oil then we had. But it's at the surface rather then below the oil window where most of us wish it were.
Oil shale is an old oil field that found it's way to the surface. If we'd gotten to canadian tar sands hendreds of millions of years ago, it would have been like sucking light sweet iraqi crude.
no source rock, then little if any oil
go to L.A. near where i live and look at the La Brea Tar Pits
that's what happens when there is no oil trap
if there is no oil trap. then it would seep to the surface in time.
then it degrades
go to L.A. near where i live and look at the La Brea Tar Pits
that's what happens when there is no oil trap
if there is no oil trap. then it would seep to the surface in time and then degrade.
Not really. It's actually concentrated in places with a pretty special geological history.
This blog means that none of the nonsense W & others blither can be turned into a substitute for oil. I don't think that your cheery words mean anything, KillTheMesanger. The end of a great & cheap source of oil means the end of using oil for a portion of the earth's people. These people won't be able to afford oil. Feel free to welcome the change. But don't be surprised if others will be too occupied in learning to adapting to living with an ever diminishing, ever more expensive supply of oil to join in welcoming this era. Do not be surprised if people close off rooms when they can't afford to heat or cool all of a house. Large houses in the more distant suburbs may become drugs on the market which can't be sold save with much reduced prices.
It will be a challenge to live in an era of less oil. I'm far from the only one who hates challenges. Being a consumer who wasted things in a de facto sense has been encouraged in the USA. Advertisers found consumers to be a valued part of a 'growing' society.
To spectulate in oil is a foolhardy propisition, since America is waking up...at this point in time it is very unamerican, and seriously unpatriotic., Knowone wants to be in on the greed and terror that oil is reaping...I believe in the American people, once they figure out that speculations is causing these draconion prices. Americans will stand up and be counted.
To which I can only say: you really bought the snake oil. You saw the sideshow and fell in love with the bearded lady. You are willing to believe that water turns into wine because the circus magician tells you it does.
Now, a walk to the library and some serious time spent in the geology section might clear these misconceptions up. But then, libraries are more freaky than side shows and they make for such poor entertainment... don't they?
Hi Mr. Klare,
Since 1859 geologists and scientists have been predicting we will run out of oil and gas. This is the result of a few observations . . .
(1) Oil fields start to decline the moment they start to produce
(2) All oil wells are eventually plugged
(3) Oil discoveries drive prices down
(4) Declaring we have run out of oil . . . drives prices up
(5) Who to trust: Rarely do geologists "discover" oil fields . . . they have been wrong far more often than they are right
(6) Envy: Geophysicists, Engineers and Landmen usually get all the credit for oil discoveries
(7) Partial Story: Wildcatters NEVER share information about discoveries.
(8) Spin: Only fields we ever hear about are those just starting up, or declining
As a result, geologists have been able to predict the end of oil reserves for 150+ years. They find a willing audience. They have the motive. It is an easy yarn to tell. Others benefit and spin is in their favor.
The only thing that messes the story up is . . . we keep discovering more oil . . . over and over again!
. . . so they say, but the next time we run out of oil will be for real!
Only the "bit" tells the truth . . . and in the pursuit of truth . . . we need to keep drilling!
yep
we keep finding oil through time
less and less of it through time
with lower flow rates because of thicker, heavier oil (viscosity)
pretty soon we'll reduced to trying to squeeze oil from rocks
we do it in canada but the production rate is very, very low and always will be
so yeah
even when eroie of oil is 1:1 and there is no economic point to drilling for oil, there will still be some left in the ground
so what?
Mr Alamo, My thoughts on some of your points:
(3) This one: "Oil discoveries drive prices down"
Can you cite an example? Petrobas" recent offshore discovery sure hasn"t driven prices down. I think actual production is what drive prices down.
(4) And this? "Declaring we have run out of oil . . . drives prices up"
A ludicrous statement based on what? If true, OPEC and others would be doing this. On the contrary, they clearly overstate reserves and explicitly reject Peak Oil. What DOES drive prices up is declining exports. That is what they call market fundamentals.
The author laid out very well that reserve replacement ain"t happening. It is not a theory or conspiracy, just a fact.
Doesn"t it bother you just a little bit what is being bragged about for current production and reserves? Alberta Tar Sands? Bakken Shale? ANWR? Coastal reserves? All of these together won"t equate to any one elephant field that the world has been living on for so long.
The Cornucopian Elixir is sweet stuff, but the bitter truth needs to be told. Hats off to Huffpost for reprinting Mr Klares well written piece.
One last thing Mr Alamo,
Who has actually "Declared we have run out of oil ....."
From any source of your choosing, tell me who.
Thanks,
I am out.
Hi GetAbike,
Appreciate the reply!
Returns . .
(3) Good point . . . I was thinking of Spindletop, Cushing, North Sea . . . and yes, Prudhoe reduced oil prices, but it was only when the field started up.
(4) "declaring . . .drives prices up" - What I was referring to was an oilman (long ago) who said . . . "oil is a commodity . . . everytime we produce more we drive our price down . . .what we need is some way to make oil unique, scarce and exclusive . . . only then will we be able to make money at oil" . . . . What the environmental effort has done . . . on behalf of oilmen . . . is to make oil appear scarce and regionally exclusive . . . ignore the motives for a moment . . . the net effect is that the environmental effort has made oilmen and ranchers richer than they ever dreamed.
Peak Oil and reserve replacement - Reserve reporting significantly understates potential (let alone actual reserves discovered) . . . Oil and financial folks know this and don't give these numbers more than a passing glance. Quite hard for myself to base conclusions upon numbers so understated.
. . . and yes . . . Huffpost did good reprinting Mr Klares inspiration article . . . otherwise we couldn't get the topic on the table.
We use roughly 9 barrels of oil for every barrel we discover. Do the math. Unless you think God's going to put more of the stuff in the ground, it's going to run out at some point.
Secondly, all barrels of oil are not created equal. We've picked all the low hanging fruit and what's left is difficult and expensive to get at. A barrel of oil that's a mile below the ocean floor is much more expensive to get at than one from Saudi Arabia. The price reflects the extra expense it took to get that barrel out of the ground (or tar sands or shale).
Posted June 30, 2008 | 03:05 PM (EST)