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Why Palast Is Wrong
And why the oil companies don’t want you to know it

Greg Palast, Guerrilla News Network
Now that I’ve convinced you that the Peak Oil crowd is crackers [in his previous column: No Peaking: The Hubbert Humbug], let me disagree with myself. We can’t understand the new class war unless we understand why oil, a certain kind at least, has in fact “peaked.”

We’ve long jumped over Hubbert’s predicted peak and, in 2006, rolled our SUVs right through the “culmination”— that is, used the last drops of the one-and-a-quarter-trillion barrels of liquid crude the good Earth can provide according to the Hubbert jeremiad…. The Shell/Hubbert predictions were dead wrong. Those are the facts.

But Hubbert was also deadly right. We are indeed running out of oil… a certain kind of oil … cheap oil. That is, we are coming to the end of the stuff we can pump at a low cost, the easy oil that practically jumps out of the ground. When we bring price into the equation, Hubbert was correct—technically. Oil production did peak in the 1970s—for a certain type of oil.

…So who’s selling us Peak Oil today? The operator of the supertanker Condoleezza has been running an extravagant advertising blitzkrieg to tell us: We’ve peaked! “The world consumes two barrels of oil for every barrel discovered!” That’s just the billboard. Their double-page spread in Harper’s is even more hysterical: “The fact is, the world has been finding less oil than it’s been using for twenty years now.”

Unfortunately, that “fact” isn’t a fact at all—reserves rise year after year—and those facts don’t change because Chevron paid my magazine to print it.

…A closing note of caution: I fear that some may take my noting the super-abundance of oil remaining on the planet as approval for our using it. Far from it—getting off the oil habit is an urgent working- class issue. First, because cheap, good air and water are in limited supply. We can’t keep pooping combustion contaminants into the sky unless expect we expect our children to grow gills that will metabolize sulfur. There’s lots of arsenic on the planet. Don’t eat it. There’s lots of oil. Don’t burn it.

Second, massive oil use is like any other addiction—it sickens the user and only enriches the pusher; in the case of oil, that would be ExxonMobil, OPEC and Vladimir Putin. Get the petroleum needle out of our veins and we get the extra bonus of watching Citibank go through agonizing petro-dollar withdrawal.
(23 May 2006)
See the May 24 Peak Oil headlines for a critique. Actually, this column is sort of a letdown. After several hundred words attacking Hubbert for errors and being a tool of the oil companies, Palast says that actually he agree with Hubbert – we are at the end of cheap oil.

This piece and an earlier piece No Peaking: The Hubbert Humbug are excerpted from Palast’s new book Armed Madhouse.

Palast website. (We’ll be hoping he clarifies his position.)

Mobjectivist kinda’ defends Palast:

Based on some of his recent articles and appearances, I had a feeling that Palast would bring a peak-oil denying argument up because of our problems in distinguishing between (1) peak oil as a convenient excuse for raising prices and (2) controlling oil-rich regions as a means to set prices.

In this “offensive” article, Palast essentially adds a needed viewpoint to the mix. I had read some of his recent articles on using the Iraq conflict as a controlling mechanism. He had to write the peak oil article to clearly demonstrate the schism. He might have gone too far in his zealousness but it certainly left a mark.

He had also written as a companion piece, this article, “Why Palast is wrong : And why the oil companies don’t want you to know it,” as an excerpt from his recent book “The Armed Madhouse”. So all his talk of a Hubbert Peak scam in the previous article turned into a clever strawman and devil’s advocacy for the payoff article.

Big Gav quotes Andre Leonard at Salon skewering Palast:

Reasonable people can disagree on when the peak will arrive or what its implications for the world economy will be. The Hirsch Report has a good summary of various estimates. Notably, Palast makes no mention of the fact that Hubbert’s prediction of when oil production would peak in the United States—1970—was right on the money. Instead he ladles on buckets of sarcasm predicated on the observations that Hubbert’s figures for global reserves of oil were incorrect, and peak oil in the world doesn’t appear to have occurred, yet.

Maybe it has, maybe it hasn’t. We don’t really know how much oil is left in Saudi Arabia or Iran or the countries of the former Soviet Union…

Most ridiculously of all, Palast suggests that we dismiss Hubbert and peak oil because Hubbert was a petroleum geologist who worked for Shell. Oil companies, Palast tells us, want us to believe in peak oil, because it gives them an excuse to keep raising prices. Tell that to Exxon, who just this February calmly assured the world that there’s plenty of oil to satisfy demand.

The argument doesn’t stand the most basic sniff test. The oil industry does not want the world to think peak oil is right around the corner, and watch government and consumers rush to embrace alternative energy technologies. For a glimpse at how the industry reacted to Hubbert at the time, try Hubbert’s own recollections. Executive summary: They thought he was crazy.

I probably should have stopped reading Palast when I realized he didn’t understand what the word “culmination” meant. But if there’s anything more annoying than corporate-subsidized right-wing propaganda it’s half-baked left-wing conspiracy theorizing.


New Estimate of Venezuela’s Total Oil Reserves Makes It the Grandest of Grand Prizes for US

Stephen Lendman, Znet
I just finished reading an important new book the author’s publisher sent me, which I’ll shortly be reviewing for publication. The book is investigative journalist (and in his words “forensic economist”) Greg Palast’s latest foray into exposing the hidden from view crimes and wrongdoings of the Bush administration…

Palast’s book is almost encyclopedic in detail, but I only want to focus here on one part of it that relates to Venezuela. In it Palast provides information showing the country may be of far greater strategic importance to the US than we likely realized. It all relates to a somewhat arcane theory called Hubbert’s peak that many readers may not know about or understand well if they do. Before reading Greg’s book, I knew about it but didn’t understand it as well as I do now.

M. King Hubbert was a well-respected geologist of his time who on March 7, 1956 published a research paper explaining his notion of “peak oil,” the amount of total reserves likely to be available, when production would peak, and when we would likely exhaust a finite supply. Ever since his report came out, it’s been held up as gospel by many who follow the oil market. The essence of the Hubbert theory, whether we accept it or not, was that “peak oil” would be reached around this year. However, in fact, production rose every year since Hubbert’s prediction and new discoveries of oil have so far kept pace.

M. King Hubbert may have been a fine geologist deserving of the his reputation. But today we know much more than Hubbert did in his time, and it’s currently believed by some savvy analysts that we’re nowhere near peaking or running out of oil.

Palast sides with that view and concludes that we have enough oil left untapped to last many decades into the future. Why? Because there’s oil and then there’s oil – there’s the easy to find and refine kind called “light sweet” like what’s abundant in the Middle East, and there’s also the harder to find, more expensive to refine so-called “heavy crude” and oil available from tar sands. When the latter two categories are added in, the amount of total oil available skyrockets to off-the-chart numbers.

…Palast reports a US Energy Department expert believes Venezuela holds 90% of the world’s super-heavy tar oil reserves – an estimated total of 1,360,000,000,000 (1.36 trillion) barrels. Let me repeat that – 1.36 trillion barrels. That alone is more oil than Hubbert believed 50 years ago lay under the entire planet.

Again, back to the key issue. Whatever the true highest estimate of reserves is from all varieties of oil, those reserves are only available at a price. If it ever gets too low again, which looks unlikely, those heavy reserves and tar sands oil will again go off the charts and be uncounted. However, with today’s heavy demand and the likelihood of it continuing to grow in the future, the price of oil may continue to rise and all reserves from all sources may be needed and used to supply the market.

So with a report like this coming from an apparent credible source (according to Palast) in the US Energy Department, it takes little imagination for VHeadline readers to understand more than ever that Venezuela is likely viewed by any US administration as the world’s most important source of future oil supply.
(24 May 2006)

Aaagh! The heavens forfend, if people are getting their understanding about Hubbert from Greg Palast’s error-riddled explanation. If you don’t want to look ridiculous, you have to understand Hubbert before you try to debunk him. Read responsible writers like Deffeyes, Goodstein, Heinberg or Tertzakian (or EB’s online Peak Oil Primer).

On the other hand, Palast and Lendman make a good point about Venezuela’s tar sands looking very attractive as oil prices climb.

Oil is Not Scarce- The Oil Industry Continues to Play Us For Fools

Raymond J. Learsy, The Huffington Post
…Most ominously, in sotto voce, as though delivering bad news to a concerned family member, the industry argues that the world is running out of oil and that shortages are imminent. Industry spokesmen also imply, without saying so directly, that mile long lines could form at your filling station any day now. That, they try to make us understand, is why the market is so jittery, with oil prices jumping every time a pipeline leaks. The only trouble is that it isn’t true. Oil, and permit me to underline this, is not scarce!

That is one of the most important facts in our world, and hardly anyone you meet will believe it. Most people have been bamboozled by the oil industry led by its flacks, by compliant analysts (read Daniel Yergin et al), by peak oil spinmeisters, a snoozing press, and the heavy artillery brought to bear by the Organization of Petroleum Exporting Countries (OPEC), which works overtime and spends big to make us believe in the myth of scarcity. That keeps prices high and oilmen rich, while the rest of us pay and pay and pay.

Even by the industry’s own figures, which are surely understated given the restrictive Securities and Exchange Commission (SEC) reporting constraints. Proved reserves of oil around the world were pegged at 1.2 trillion barrels as of 2004, a humongous supply. And that figure doesn’t include even vaster deposits of oil that will come on the market as technology makes it cheaper to extract.

…Please understand this is not an argument for greater consumption. Everything needs be done to wean us from our addiction to fossil fuels no matter what the level of supply. What we also need is to understand that we have to end this con game that has enriched the pusher beyond his wildest dreams, and to the point that we are now expected to say thank you every time we get a fix. It is time to call his bluff and to do all we can to push down the price of crude oil and to make ourselves energy self reliant. We must stop enriching those in league with the con artists and pushers, meaning the oil patch in general.
(24 May 2006)
Perhaps we should establish a truth center to combat peak oil skeptics, as Alex Steffens has proposed for climate change.

For starters:

  • Peak oil does not say that oil will run out soon. It’s cheap oil that is coming to an end.

  • Oil from tar sands and oil shale is expensive and has a low Energy Returned on Energy Invested (ERoEI) ratio.
  • OPEC and oil companies are not enthusiastic about the concept of peak oil. Most of the research and writing is being done by people outside the big oil companies.

It’s odd that author Raymond J. Learsy should misunderstand peak oil, given his background.
– BA (peakoil spinnmeister)

What’s Your Future?

Jamais Casicio, Open the Future
How do you envision the future? Are we on the verge of dystopia? Soon to be transformed by accelerating change? Ready to strap on the jet packs to pick up our food pills? Settling in for a long struggle?

It struck me recently, while talking with my friend Jacob Davies, that the relative success of WorldChanging and similar projects could be linked to the re-invigoration of a worldview combining optimism (a belief that success is possible, and can be broadly achieved) and realism (a belief that global processes are imperfect and cannot be perfected, and change happens through compromise and evolution). Jacob gave some further thought to this idea, and elaborated a bit on its implications in a comment at the Making Light weblog. The combination of belief sets — optimism vs. pessimism, realism vs. idealism — offer us a matrix for describing divergent ways of looking at the future.
(22 May 2006)
Thanks to Big Gav
Related: Poll: Where are you in the peak oil taxonomy? (The Oil Drum)