Archbishop Oscar Arnulfo Romero y Galdamez 1917 - 1980
"I have frequently been threatened with death. I must tell you that, as a Christian, I do not believe in death but in resurrection. If they kill me, I will rise again in the Salvadoran people." ---------------------------------------------------------------------------- -- Archbishop Oscar Arnulfo Romero y Galdamez, archbishop of San Salvador, El Salvador, was born on August 15, 1917, in the town of Ciudad Barrios, department of San Miguel, El Salvador. He died from an assassin's bullet on March 24, 1980, in San Salvador while celebrating Mass. One well-aimed shot, fired with professional precision, was enough to bring down the wiry archbishop. A last moutful of blood was the final offering of someone who throughout his sixty-three years, but especially during his last three as an archbishop, had given his entire being over to the service of the people of El Salvador, particularly to the service of the poor and the oppressed. Ignacio Martín Baró (La Palabra viva de Monseñor Oscar Arnulfo Romero. UCA Editores. 1980.) The Monseñor Oscar Romero University was founded upon the basis of the Archbishop's teachings, and most specifically, by his advocacy for the poor and voiceless. Inspired by the Episcopal meeting at Puebla, Romero wrote: [We must] take seriously the preferential option for the poor: Striving "to understand and denounce the mechanisms that generate this poverty." Uniting our efforts "with those of people of good will in order to uproot poverty and create a more just and fraternal world." Supporting "the aspirations of laborers and peasants, who wish to be treated as free, responsible human beings. They are called to share in the decisions that affect their lives and their future, and we encourage all to improve themselves." Defending "their fundamental right to freely create organizations to defend and promote their interests, and to make a responsible contribution to the common good." "Whether peak oil arrives in 2005, 2010, or 2015, and whether the maximum level of daily oil output turns out to be 90 or 100 million barrels will not matter much in the long run" The Energy Crunch to Come Soaring Oil Profits, Declining Discoveries, and Danger Signs by Michael T. Klare by TomDispatch.com - March 22, 2005 http://www.tomdispatch.com/index.mhtml?emx=x&pid=2277 Data released annually at this time by the major oil companies on their prior-year performances rarely generates much interest outside the business world. With oil prices at an all-time high and Big Oil reporting record profits, however, this year has been exceptional. Many media outlets covered the announcement of mammoth profits garnered by ExxonMobil, the nation's wealthiest public corporation, and other large firms. Exxon's fourth-quarter earnings, at $8.42 billion, represented the highest quarterly income ever reported by an American firm. "This is the most profitable company in the world," declared Nick Raich, research director of Zacks Investment Research in Chicago. But cheering as the recent announcements may have been for many on Wall Street, they also contained a less auspicious sign. Despite having spent billions of dollars on exploration, the major energy firms are reporting few new discoveries and so have been digging ever deeper into existing reserves. If this trend continues -- and there is every reason to assume it will -- the world is headed for a severe and prolonged energy crunch in the not-too-distant future. To put this in perspective, bear in mind that the global oil industry has, until now, largely been able to increase its combined output every year in step with rising world demand. True, there have been a number of occasions when demand has outpaced supply, producing temporary shortages and high gasoline prices at the pump. But the industry has always been able been able to catch up again and so quench the world's insatiable thirst for oil. This has been possible because the big energy companies kept up a constant and successful search for new sources of oil to supplement the supplies drawn from their existing reserves. The world's known reserves still contain a lot of oil -- approximately 1.1 trillion barrels, by the estimates of experts at the oil major BP -- but they cannot satisfy rising world demand indefinitely; and so, in the absence of major new discoveries, we face a gradual contraction in the global supply of petroleum. Signs of an Energy Crunch It is in this context that the following disclosures, all reported in recent months, take on such significance. * ConocoPhillips, the Houston-based amalgam of Continental Oil and Phillips Petroleum, announced in January that new additions to its oil reserves in 2004 amounted to only about 60-65% of all the oil it produced that year, entailing a significant depletion of those existing reserves. * ChevronTexaco, the second largest U.S. energy firm after ExxonMobil, also reported a significant imbalance between oil production and replacement. Although not willing to disclose the precise nature of the company's shortfall, chief executive Dave O'Reilly told analysts that he expects "our 2004 reserves-replacement rate to be low." * Royal Dutch/Shell, already reeling from admissions last year that it had over-stated its oil and natural gas reserves by 20%, recently lowered its estimated holdings by another 10%, bringing its net loss to the equivalent of 5.3 billion barrels of oil. Even more worrisome, Shell announced in February that it had replaced only about 45-55% of the oil and gas it produced in 2004, an unexpectedly disappointing figure. These and similar disclosures suggest that the major private oil companies are failing to discover promising new sources of petroleum just as demand for their products soars. According to a recent study released by PFC Energy of Washington, D.C., over the past 20 years, the major oil firms have been producing and consuming twice as much oil as they have been finding. "In effect," says Mike Rodgers, author of the report, "the world's crude oil supply is still largely dependent on legacy assets discovered during the exploration heydays." True, vast reservoirs of untapped petroleum were discovered in those "heydays," mostly the 1950s and 1960s, but these reserves, being finite, will eventually run dry and, if not replaced soon, will leave the world facing a devastating energy crunch. The notion that world oil supplies are likely to contract in the years ahead is hotly contested by numerous analysts in government and industry, who contend that many large fields await discovery. "Is the resource base large enough [to satisfy rising world demand]? We believe it is," affirmed ExxonMobil president Rex W. Tillerson in December. But other experts cast doubt on such claims by pointing to those disappointing reserve-replacement rates. "We've run out of good projects," said Matt Simmons, head of the oil- investment bank Simmons & Co. International. "This is not a money issue.... If these companies had fantastic projects, they'd be out there [developing new fields]." That the major oil firms see few promising new fields to invest in right now is further suggested by reports that these companies are sinking their colossal profits in mega-mergers and stock buy-back programs rather than in exploration and field development. ExxonMobil, for example, spent $9.95 billion to buy back its own stock in 2004, while ChevronTexaco put out $2.5 billion to do the same. Meanwhile several big companies, including ChevronTexaco, are said to be eyeing California-based Unocal Corp. as a possible acquisition, and ConocoPhillips recently announced a $2 billion investment in Lukoil, the Russian energy giant. These moves are consuming funds that might have gone into new-field exploration -- yet another indicator of diminished expectations for major new discoveries. "If they had attractive things to invest in, they'd be investing their little heads off," explained PFC Energy managing director Gerald Kepes. But the great exploration opportunities of yesteryear "have largely dried up." It is true, of course, that the private energy firms are largely barred from investment in Mexico, Venezuela, and the Persian Gulf countries, where oilfield development is the exclusive prerogative of state-owned companies. Hence, a major goal of the Bush administration's energy policy is to persuade or compel these countries to open up their territories to exploration by U.S. firms -- which, it is claimed, possess the advanced technological know-how that would make possible the discovery of previously unknown fields. But the energy professionals who run the state- owned companies insist that they do not need outside help to search for oil and that they have already mapped their countries' major prospects. Here, too, there has been a marked slowdown in new discoveries over the past decade or so. The worldwide decline in new discoveries has profound implications for the global supply of energy and, by extension, the world economy. Given a recent surge in energy demand from China and other rapidly-developing countries, the U.S. Department of Energy (DoE) predicts that, for all future energy needs to be satisfied, total world oil output will have to climb by 50% between now and 2025; from, that is, approximately 80 million to 120 million barrels per day. A staggering increase in global production, that extra 40 million barrels per day would be the equivalent of total world daily consumption in 1969. Absent major new discoveries, however, the global oil industry will likely prove incapable of providing all of this additional energy. Without massive new oil discoveries, prices will rise, supplies will dwindle, and the world economy will plunge into recession -- or worse. Where Is Oil's Peak? Just how soon such an energy crunch will arrive and just how severe it is likely to be are matters of considerable debate. To a great extent, this debate hinges on the concept of "peak oil," or maximum sustainable daily output. In the 1950s, a petroleum geologist named M. King Hubbert published a series of equations showing that the output of any given oil well or reservoir will follow a parabolic curve over time. Production rises quickly after initial drilling and then loses momentum as output reaches its maximum or "peak" -- usually when half of the total amount of oil has been extracted -- after which production falls at an increasingly sharp rate. In 1956, using these equations, Hubbert predicted that conventional (that is, liquid) U.S. oil output would peak in the early 1970s. His prediction provoked much derision at the time, but earned him considerable renown when U.S. output did indeed achieve its peak level in 1972. Because of insufficient data at the time, Hubbert was unable to apply his equations to non-U.S. production. He did, however, predict that global output -- just like U.S. output -- would eventually reach a peak level and then begin an irreversible decline. Today, the concept of global peak oil is widely accepted in the energy field, though debate rages over when this moment will actually occur. Those who believe that oil supplies are abundant tend to put this date far in the future, well beyond our immediate concern. The DoE, for example, noted in its International Energy Outlook for 2004 that it expects "conventional oil to peak closer to the middle than to the beginning of the 21st century." But other analysts are not so sanguine. "It is my opinion that the peak will occur in late 2005 or in the first few months of 2006," says Princeton geologist Kenneth S. Deffeyes in a new book, Beyond Oil. A more conservative estimate by Mike Rodgers of PFC Energy locates the peak somewhere in the vicinity of 2010-2015. If either of these predictions proves accurate, global oil supply can never climb high enough to satisfy the elevated consumption levels projected by the DoE for 2025 and beyond. Where one stands on this critical issue depends on one's estimate of how much petroleum the Earth originally possessed. Those like Deffeyes, who contend that peak oil will arrive soon, believe that our petroleum inheritance amounted to roughly 2,000 billion barrels when commercial oil drilling first commenced in 1859. Since we have already consumed approximately 950 billion barrels and are now burning some 30 billion barrels each year, in this scenario the halfway point of total world extraction -- and so the moment of peak production -- should be just a year or two away. By contrast, those who hold that peak oil is safely in the distance claim that the world's total inheritance is closer to 3,000 billion barrels. This more optimistic figure would include the 950 billion barrels already consumed, "proven" reserves of approximately 1,150 billion barrels, and as-yet-undiscovered fields believed to hold another 900 billion barrels. This latter amount, it should be noted, represents the equivalent of all the known oil in the Middle East, Asia, and Africa combined. Where might these mammoth still-undiscovered reservoirs lie? This is no idle question, given that the major oil companies have scoured the world for over a century in the search of new sources of supply -- and, in recent years, have come up virtually empty-handed. True, a handful of impressive finds -- in the 1 billion barrel range -- have been uncovered off the west coast of Africa, and one very large field (the 10-billion barrel Kashagan field) was discovered in Kazakhstan's portion of the Caspian Sea. Most other recent discoveries have been relatively small, and often located in deep offshore waters or other remote locations where the costs of production are high. "The reason [investment] is not increasing," Mike Rodgers has observed, "is that, in so many regions of the world, the fields have gotten so small that even though you might be able to drill a well and get a positive rate of return, the incremental value doesn't mean a lot." It is conceivable, of course, that Iraq and Saudi Arabia could harbor large fields that have simply escaped discovery in earlier sweeps. Perhaps these could indeed be located through the use of advanced seismic technology, as advocated by the Bush administration. Put all of this together, however, and none of it comes remotely close to the scale of discovery needed to generate that additional 900 billion barrels of oil, which is why the recent oil-company reports are so significant. If the more optimistic estimates of global oil are on the mark, it stands to reason that the major firms should be finding more new oil every year than they are producing; yet the very opposite has been the case for the last 20 years. If this continues to be the case, it is hard to imagine that the approach of global peak oil can be that far in the future. Whether peak oil arrives in 2005, 2010, or 2015, and whether the maximum level of daily oil output turns out to be 90 or 100 million barrels will not matter much in the long run. In any of these scenarios, global oil production will level off and begin to decline at a level far below the anticipated world demand of 120 million barrels per day in 2025. True, some of this shortfall may be absorbed by the accelerated development of "unconventional" petroleum fuels -- liquid condensate from the production of natural gas, fuels derived from tar sands and oil shale, liquids extracted from coal, and the like -- but these materials are exceedingly costly to produce and their manufacture entails too many environmental risks to make them practical substitutes for conventional oil. Even with increased production of such substitutes, the inevitable contraction in global petroleum supplies would only be postponed for a few years. Eventually, scientists and engineers may develop entirely new sources of energy -- for example, geothermal, biomass, or hydrogen-based systems -- but at current rates of development, none of these alternatives will be available on a large enough scale when petroleum products become scarce. So while the major stockholders of Exxon, Chevron, and the other oil giants may be exulting at the moment, the rest of us should be deeply disturbed by their recent reports. Despite all the optimistic talk from Washington, we are facing a substantial and inescapable threat of global energy scarcity, which can only have dire consequences for our economy and the world's. Indeed, we are beginning to see hints of that today, with rising prices at the neighborhood gas pump and a perceptible decline in consumer spending. This coming scarcity cannot be wished away, nor can it be erased through drilling in the Arctic National Wildlife Refuge, which contains far too little petroleum to make a significant difference even in U.S. oil supplies. Only an ambitious program of energy conservation -- entailing the imposition of much higher fuel-efficiency standards for American automobiles and SUVs -- and the massive funding of R&D in, and then the full-scale development of alternative, environmentally- friendly fuels can offer hope of averting the disaster otherwise awaiting us. Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author, most recently, of Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency (Metropolitan Books). © 2005 Michael T. Klare _______________________________________________________ portside (the left side in nautical parlance) is a news, discussion and debate service of the Committees of Correspondence for Democracy and Socialism. It aims to provide varied material of interest to people on the left. 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