Building pressure for a world war to secure oil supplies?

What are we fighting in Iraq for? What are we fighting in Afghanistan for? Why are we threatening Iran?

Think it's about ephemeral things such as establishing democracy and freedom? Think again. There are dozens of freedom-hating countries around the world that we don't threaten with our military. Some of those freedom hating countries had their leaders installed by the U.S. We aren't threatening those countries, only the ones in the Middle East.

This article outlines the growing danger of a world war fought to secure oil supplies: A battle for oil could set the world aflame International powers will do everything to protect their access to dwindling resources. We are mad not to have an alternative strategy (Will Hutton, Sunday April 30, 2006, The Observer)

The key piece is twofold. First is the incontrovertible fact that the U.S. and China both have very little domestic oil supplies. What has allowed our modern societies to flourish isn't technology, it's that the technology has cheap energy to drive it. We could have the same dazzling array of technology, but if the energy to drive the technology wasn't available the technology would be useless. And, this is a situation we all may be facing in a few years.

The U.S. imports over 60% of its oil needs. In the 1970's there were two oil embargo crisis, at a time when the U.S. imported only 35% of its oil needs, and which drove the U.S. into a recession. What would happen today if the supply of oil to the U.S. were to dry up?

At the same time China is experiencing rapid economic growth, which is in turn causing rapid growth in its energy demands.

The article discusses China's role in both the Sudan/Darfur fiasco, and the showdown against Iran. In both cases China has made oil deals with the countries in question, and at the same time are expected to veto any UN Security Council actions against those countries. Further, Iran and China have an oil deal, part of which is shipping oil from Iran to China via a pipeline through Central Asia. Such a pipeline is a strategic move that would keep the U.S. from enforcing anything against that oil, because our Navy is useless in reaching Central Asia.

The coming world oil disruptions

I was in my young teens in the early 1970's when the oil embargo was used against the U.S. In the second oil embargo I was in college. Those two events really affected me and is what's driving me today to study energy supplies.

Stanford EMF: 80% Probability of Major Oil Disruption in Next Ten Years covers a study done by Hillard Huntington, Executive Director Energy Modeling Forum (EMF), Stanford University, which discusses the probabilities of another oil disruption.

Thinking about it now, this shouldn't be surprising. For example we are threatening Iran right now which could easily turn into a major oil disruption. And generally speaking, OPEC did it before (staging oil disruptions) so why wouldn't they do it again?

The thing that's really alarming is what the effect would be.

In the 1970's the recessions we had then were likely triggered by the oil embargo's. Those oil embargo's caused the price of oil to rise pretty high. Remember Carter's Windfall Profits Tax? President Enron nor Vice President Halliburton nor Secretary of State Chevron are likely to push for such a tax, but we have the same conditions today that occurred in the 1970's that prompted that tax.

In the 1970's the U.S. imported 35% of its' oil needs. Today we import 70% of our oil needs. If there were another oil disruption today, the effect on the U.S. would be far more dramatic than the effect in the 1970's.

What they don't want you to know about the coming oil crisis

This: What they don't want you to know about the coming oil crisis is perhaps the most important thing you could read to aid understanding the oil and energy problem. The oil and energy problem is very likely going to sink our modern way of life. Why? Because our way of life is utterly dependant on hugely extravagent energy use, facilitated by fossil fuels like oil and gas. Why is this a problem? Because the oil and gas are in limited supply, and relatively soon the oil and gas companies will be unable to supply the demand.

The other day I wrote a posting quoting an oil company economist saying not to worry, market forces will take care of it. Consider this effect of market forces:

Meanwhile, domestic gas bills, which rose by more than a third last year, are expected to rise even higher in the next few months. For many people, such fluctuations have lethal implications. Last winter, there were some 35,000 "excess winter deaths" in the UK, most of them attributable to old people not being able to keep warm enough; and last winter was a relatively mild one.

That's market forces at work. The price rises, people can't afford to stay warm, and 35,000 people die as a result. Yup, sorry about your grandma, but that's just market forces at work.

We have allowed oil to become vital to virtually everything we do. Ninety per cent of all our transportation, whether by land, air or sea, is fuelled by oil. Ninety-five per cent of all goods in shops involve the use of oil. Ninety-five per cent of all our food products require oil use. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles. The world consumes more than 80 million barrels of oil a day, 29 billion barrels a year, at the time of writing. This figure is rising fast, as it has done for decades. The almost universal expectation is that it will keep doing so for years to come. The US government assumes that global demand will grow to around 120 million barrels a day, 43 billion barrels a year, by 2025. Few question the feasibility of this requirement, or the oil industry's ability to meet it.

They should, because the oil industry won't come close to producing 120 million barrels a day; nor, for reasons that I will discuss later, is there any prospect of the shortfall being taken up by gas. In other words, the most basic of the foundations of our assumptions of future economic wellbeing is rotten. Our society is in a state of collective denial that has no precedent in history, in terms of its scale and implications.

The article goes on from there to describe America's contribution to this mess. The U.S. domestic oil supply reached its peak output in 1970, and U.S. domestic oil production has only declined since, while U.S. oil demand has only climbed. "Of America's current daily consumption of 20 million barrels, 5 million are imported from the Middle East, where almost two-thirds of the world's oil reserves lie in a region of especially intense and long-lived conflicts. Every day, 15 million barrels pass in tankers through the narrow Straits of Hormuz, in the troubled waters between Saudi Arabia and Iran. " The U.S. could reduce demand by 5 million barrels of oil very easily by requiring an increase in fuel efficiency of only 2.5 gallons per mile. This would be easy for Detroit to achieve, but realistically speaking with President Enron and Vice President Halliburton in office is there a chance of that happening?

The SUV market share in the US was 2 per cent in 1975. By 2003 it was 24 per cent. In consequence, average US vehicle fuel efficiency fell between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time when other countries were producing cars capable of up to 60 miles per gallon.

With this kind of trend, we are literally driving ourselves to oblivion.

The importance to this question lies with how is it going to be solved. No amount of economic free market theory will cover up the fact that what we have is a limited, and declining, resource. We will not have the luxury of waiting 6 million years for oil reserves to recover through geologic mechanisms. Instead, when the oil peaks and begins to run dry, the wars we're seeing now will seem tame in comparison.

If we are to avoid that fate, we must begin working on some alternative way of moving our butts from place to place. And it's not just transportation, it's our food supply. As the article says, agriculture is a huge user of oil if only because the Market Economy has resulted in most cities not having their own food production capacity, and instead relying on the ability to ship food from far remote places. How else can arctic cities have fresh fruit in the dead of winter???

It takes time to develop a new energy technology. A lot of time. Fortunately there are some alternative technologies being worked on, but they are all struggling with limited funding for research. Plus they all are suffering from a playing field shaped by market forces that are strongly favoring the entrenched fossil fuel resources.

What they don't want you to know about the coming oil crisis

This: What they don't want you to know about the coming oil crisis is perhaps the most important thing you could read to aid understanding the oil and energy problem. The oil and energy problem is very likely going to sink our modern way of life. Why? Because our way of life is utterly dependant on hugely extravagent energy use, facilitated by fossil fuels like oil and gas. Why is this a problem? Because the oil and gas are in limited supply, and relatively soon the oil and gas companies will be unable to supply the demand.

The other day I wrote a posting quoting an oil company economist saying not to worry, market forces will take care of it. Consider this effect of market forces:

Meanwhile, domestic gas bills, which rose by more than a third last year, are expected to rise even higher in the next few months. For many people, such fluctuations have lethal implications. Last winter, there were some 35,000 "excess winter deaths" in the UK, most of them attributable to old people not being able to keep warm enough; and last winter was a relatively mild one.

That's market forces at work. The price rises, people can't afford to stay warm, and 35,000 people die as a result. Yup, sorry about your grandma, but that's just market forces at work.

We have allowed oil to become vital to virtually everything we do. Ninety per cent of all our transportation, whether by land, air or sea, is fuelled by oil. Ninety-five per cent of all goods in shops involve the use of oil. Ninety-five per cent of all our food products require oil use. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles. The world consumes more than 80 million barrels of oil a day, 29 billion barrels a year, at the time of writing. This figure is rising fast, as it has done for decades. The almost universal expectation is that it will keep doing so for years to come. The US government assumes that global demand will grow to around 120 million barrels a day, 43 billion barrels a year, by 2025. Few question the feasibility of this requirement, or the oil industry's ability to meet it.

They should, because the oil industry won't come close to producing 120 million barrels a day; nor, for reasons that I will discuss later, is there any prospect of the shortfall being taken up by gas. In other words, the most basic of the foundations of our assumptions of future economic wellbeing is rotten. Our society is in a state of collective denial that has no precedent in history, in terms of its scale and implications.

The article goes on from there to describe America's contribution to this mess. The U.S. domestic oil supply reached its peak output in 1970, and U.S. domestic oil production has only declined since, while U.S. oil demand has only climbed. "Of America's current daily consumption of 20 million barrels, 5 million are imported from the Middle East, where almost two-thirds of the world's oil reserves lie in a region of especially intense and long-lived conflicts. Every day, 15 million barrels pass in tankers through the narrow Straits of Hormuz, in the troubled waters between Saudi Arabia and Iran. " The U.S. could reduce demand by 5 million barrels of oil very easily by requiring an increase in fuel efficiency of only 2.5 gallons per mile. This would be easy for Detroit to achieve, but realistically speaking with President Enron and Vice President Halliburton in office is there a chance of that happening?

The SUV market share in the US was 2 per cent in 1975. By 2003 it was 24 per cent. In consequence, average US vehicle fuel efficiency fell between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time when other countries were producing cars capable of up to 60 miles per gallon.

With this kind of trend, we are literally driving ourselves to oblivion.

The importance to this question lies with how is it going to be solved. No amount of economic free market theory will cover up the fact that what we have is a limited, and declining, resource. We will not have the luxury of waiting 6 million years for oil reserves to recover through geologic mechanisms. Instead, when the oil peaks and begins to run dry, the wars we're seeing now will seem tame in comparison.

If we are to avoid that fate, we must begin working on some alternative way of moving our butts from place to place. And it's not just transportation, it's our food supply. As the article says, agriculture is a huge user of oil if only because the Market Economy has resulted in most cities not having their own food production capacity, and instead relying on the ability to ship food from far remote places. How else can arctic cities have fresh fruit in the dead of winter???

It takes time to develop a new energy technology. A lot of time. Fortunately there are some alternative technologies being worked on, but they are all struggling with limited funding for research. Plus they all are suffering from a playing field shaped by market forces that are strongly favoring the entrenched fossil fuel resources.

Re: The price of gasoline could get ugly in 2006

The "Hybrid Cars Blog" suggests that in 2006, the price of gasoline could get ugly. That is, the high gas prices seen in the U.S. last year could be as bad, or worse. See: The price of gasoline could get ugly in 2006

The story seems to be that the cause for last years oil price surge can be found in the gap between China having increasing oil use and weather related outages in oil delivery. This year China's surging oil demand is still there, plus we have several possible outages in oil delivery such as "rebels" in Nigeria attacking oil platforms, and the situation in Iran from which there could be several ways oil delivery could be blocked.

While that story is very true, it is also an example of short term thinking.

In the long term picture the price for oil can only go up. In the short term there will be fluctuations, but long term is a different story. Why? It's because the demand continues to go up in an unabated curve, and the Peak Oil scenario is looming out there.

The Peak Oil scenario is a model developed by oil company scientists that describes production capacity over time. The model shows that the world oil production capability will peak. Already discoveries of new oil fields has dried up with discoveries not at all meeting the growth in demand for oil.

UPDATE in December 2006 ... the price for oil and gasoline did get very high up until September. Then it curiously dropped just before the election, and then has curiously risen a little since the election. Makes one wonder if some kind of price manipulation was being tried by the oil industry to prop up the Republicans? If so, it didn't work.