Keith wrote: Karen,
The big problem with all this secrecy over the true Saudi Arabian reserves is
that further spikes due to other temporary problems -- terrorist incidents,
corruption in Nigeria, strikes in Norway or Venezuela, etc -- go far higher
than they would do otherwise. It would also expose American foreign policy more
starkly. KH
Yes, I agree.
Imagine what
might be if Americans had taken Jimmy Carter seriously…at least when he signed
the Carter Doctrine he tried to preempt America’s growing dependence on foreign
imports, unlike this administration, going into year 4 of a ‘war on terrorism’.
At least today
with increasing awareness thanks in no small part to the internet, there are
wise folk taking preventive steps like installing solar in their homes, scaling
back their consumption and debt, and learning what permaculture gardening can
do for them to make the transition from cheap oil a bit easier. But for those
vast multitudes, rising energy costs mean everything about modern life is going
to be affected, regardless of those who say it won’t happen “soon”.
Some argue
that Peak Oil is just another myth, just as some argue that climate change is
not happening significantly, its all cyclical. But today’s world is much more
populated and interdependent that the last millennium, and we’ve collectively impacted
more of our natural resources than our ancestors. We will survive, in what
conditions are uncertain, but in the meantime, wouldn’t it be prudent to take
precautionary measures? KwC
For those of you who have yet to
review any of the growing body of research and writing on Peak Oil/Hubberts
Peak, but were afraid to ask, this is a good short
version explaining the hype. So far, the Bush-Cheney administration
energy policy has focused on taking the Saudis at their word, while acquiring
squatters rights over valuable real estate and making deals with unsavory
neighbors wed normally shun. KwC
The Vanishing Mirage
of Saudi Oil: Dwindling reserves may end the Petroleum Age.
Commentary by Michael T. Klare, LA
Times, June 27, 2005
For those oil enthusiasts who believe that petroleum will remain abundant for
decades to come among them, the president, vice president and their many
friends in the oil industry any talk of an imminent "peak" in global
oil production and an ensuing decline can be easily countered with a simple
mantra: "Saudi Arabia, Saudi Arabia, Saudi Arabia."
Not only will the Saudis pump extra oil now to alleviate global shortages, as
is claimed, but they will keep pumping more in the years ahead to quench our
insatiable thirst for energy. And when the kingdom's existing fields run dry,
lo, it will begin pumping from other fields that are just waiting to be
exploited. This is the basis for the administration's contention that we can
continue to increase our yearly consumption of oil, rather than conserve what's
left and begin the transition to a post-petroleum economy. But that may not be
the case. In a newly released book, investment banker Matthew R. Simmons
convincingly demonstrates that, far from being capable of increasing its
output, Saudi Arabia is about to face exhaustion of its giant fields and will
probably experience a sharp decline in output relatively soon. He also argues
that there is little chance that Saudi Arabia will ever discover new fields
that can take up the slack from those now in decline.
If Simmons is right about Saudi Arabian oil production and the official dogma
is wrong we can kiss the era of abundant petroleum goodbye forever. This is so
for a simple reason: Saudi Arabia is the world's leading oil producer, and
there is no other major supplier (or combination of suppliers) capable of
making up for the loss in Saudi production if its output falters.
According to the U.S. Department of Energy, Saudi Arabia possesses about
one-fourth of the world's proven oil reserves, an estimated 264 billion
barrels. Also, the Saudis are believed to harbor additional reserves containing
another few hundred-billion barrels. On this basis, the department asserts that
"Saudi Arabia is likely to remain the world's largest oil producer for the
foreseeable future."
Consider the DOE's projections. Because of the rapidly growing international
thirst for petroleum much of it coming from the United States and Europe, but
an increasing share from China, India and other developing nations the world's
expected requirement for petroleum is projected to jump from 77 million barrels
per day in 2001 to 121 million barrels by 2025. Fortunately, says the DOE,
global oil output will also rise by this amount in the years ahead. But over
one-fourth of this additional oil about 12.3 million barrels per day will have
to come from Saudi Arabia.
The problem is, if you take away Saudi Arabia's 12.3 million barrels, there is
no possibility of satisfying anticipated world demand in 2025.
The Saudis vehemently deny their fields are in decline. The DOE, with no
independent verification, backs them up. In the end, it comes down to this:
America's entire energy strategy, with its commitment to an increased reliance
on petroleum as the major source of our energy, rests on the unproven claims of
Saudi oil producers that they can continuously increase Saudi output in
accordance with the DOE predictions.
And this is where Simmons enters the picture, with his meticulously documented
book, "Twilight in the Desert."
Simmons is not a militant environmentalist or anti-oil partisan; he is chairman
and CEO of one of the nation's leading oil-industry investment banks, Simmons
& Co. International. For decades, he has been financing the exploration and
development of new oil reservoirs. In the process, he has become a friend and
associate of many of the top figures in the oil industry, including George W.
Bush and Dick Cheney.
Essentially, Simmons' argument boils down to four major
points:
(1) Most of Saudi Arabia's oil output is generated by a few giant
fields, of which Ghawar the world's largest is the most prolific.
(2) These giant fields were first developed 40 to 50 years ago, and have since
given up much of their easily extracted petroleum.
(3) To maintain high levels of production in these major fields, the Saudis
have come to rely increasingly on the use of water injection and other
secondary recovery methods to compensate for the drop in natural field
pressure.
(4) As time passes, the ratio of water to oil in these underground fields rises
to the point where further oil extraction becomes difficult, if not impossible.
To top it all off, there is very little reason to assume that future Saudi
exploration will result in the discovery of new fields to replace those now in
decline.
This being the case, Simmons concludes, it would be the height of folly to
assume that the Saudis are capable of doubling their petroleum output in the
years ahead, as projected by the DOE.
The moment that Saudi production goes into permanent decline in the
not-too-distant future, the Petroleum Age as we know it will draw to a close.
Oil will still be available on international markets, but not in the abundance
to which we have become accustomed and not at a price that many of us will be
able to afford. Transportation, and everything it affects virtually the
entire world economy will be much more costly. The cost of food will also rise,
as modern agriculture relies to an extraordinary extent on petroleum products
for tilling, harvesting, protecting, processing and delivery. Many other
products made with petroleum paints, plastics, lubricants, pharmaceuticals,
cosmetics and so forth will also prove far more costly. Under these
circumstances, a global economic contraction appears nearly inevitable.
Only if we act now to limit our consumption of oil and develop non-petroleum
energy alternatives, can we face the "twilight" of the Petroleum Age
with some degree of hope; if we fail to do so, we are in for a very grim time.
Given the high stakes involved, there is no doubt that intense efforts will be
made to refute Simmons' findings. With his book, however, it will no longer be
possible for oil aficionados simply to chant "Saudi Arabia, Saudi Arabia,
Saudi Arabia" and convince us that everything is all right in the oil
world.
Michael T. Klare, a professor at Hampshire
College, is the author of "Blood and Oil: The Dangers and Consequences of
America's Growing Petroleum Dependency" (Metropolitan Books, 2004). A
longer version of this article appears at www.Tomdispatch.com.
http://www.latimes.com/news/opinion/commentary/la-oe-klare27jun27,0,4666067.story?coll=la-news-comment-opinions
Also See
Hamish McRae Oil at $100 a barrel will
do more to save the planet than all the wind farms in the world. producers
did their bit - and have gone on doing so this year too. But still the oil
price rises. Short of some catastrophic collapse in the economies of China and
the US - the world's two largest oil users - demand seems set to climb
inexorably, while supply ... well, what about supply?
Production was indeed at record levels last year, but that
was thanks to OPEC and to Russia. Two producers cut production sharply. They
were, yes, the UK and the US. We are not cutting North Sea production because
we want to; we are cutting it because we cannot produce any more. The same goes
for the US.
This leads to the debate about the world's total oil
supplies. The conventional view, that of the major oil companies, is that while
production will eventually peak, there is plenty of oil still to be found, and
that production can rise at least for some years to come. The radical view,
articulated by the Association for the Study of Peak Oil, is that global
production is already close to its peak and may start to decline after 2006.
What seems to be happening is that globalisation -
competition from low-cost producers, especially in China and India - is holding
down world prices. So low interest rates do not lead to current inflation. Any
excess money goes into asset prices, especially property and fixed-interest
securities, but also to some extent shares. That is dangerous in the long run
because asset price bubbles burst. Will the central banks get the balance
right? No one can know. But it is certain that the peak of the current interest
cycle will be the lowest since the 1950s
http://news.independent.co.uk/business/comment/story.jsp?story=649614
Oil Climbs Above $60
a Barrel. With $60 no longer a threshold _ and with continued
concerns about refining capacities _ prices appeared set to go even higher,
analysts said. Bentz said there is also a speculative component to the surge in
oil prices, though he also believes that the world's limited excess production
and refining capacity have played important roles in keeping traders on edge
about potential supply disruptions. http://www.washingtonpost.com/wp-dyn/content/article/2005/06/27/AR2005062700166.html
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