Peak Oil - Jun 21
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Michael Klare Interview
The Permanent Energy Crisis
Julian Brookes, Mother Jones
On the costs and consequences of the United States' dependency on foreign oil
...Mother Jones: You argue that in the 21st century resources, rather than ethnic, civilizational, or religious differences will increasingly be at the root of conflict.
Michael T. Klare: Yes. I think this is true both of internal and interstate conflicts. Two of the bloodiest wars under way in the war wars under way—in Congo and Darfur—have arisen from the stress caused by rising population, a scarcity of resources, and climate change, which have exacerbated traditional ethnic differences, pushing people into conflict with one another. There are ethnic differences involved, of course, and I'd never say that a war is exclusively driven by resources, but they are a major factor.
As for international conflict, the focus is particularly on energy. I think there’s a growing panic in the major industrialized countries about the future availability of oil and natural gas, which are absolutely essential in modern industrial societies. And this is causing the United States, Russia, China, and Japan and other large industrial countries to try to gain control over foreign sources of oil and natural gas, particularly in Africa, the Middle East and Central Asia. I wouldn’t say we can expect direct conflict between these countries in the immediate future, but they are supporting local allies, often militarily, and this creates the conditions in which a local conflict can escalate into something very much bigger.
MJ: This is almost a reassertion of the great power politics of old.
MTK: Absolutely. I see this being very similar to the period before World War I, where you had a group of contending empires—the British, French, Prussian, Russian, Austro-Hungarian, and Ottoman empires—all competing with one another for control over colonies and the resources those colonies brought them. A lot of the skirmishing that lead to World War I occurred in these colonial areas, in Africa and in the Balkans, and this triggered a war between them.
...a shortage or disruption in oil would not only damage the U.S. economy; it would undercut American military supremacy. For that reason, oil in the United States is treated as a national security matter, not just an economic one.
...[The energy crisis] was a major theme in the 2000 election. And President Bush said his highest priority—this was before 9-11, before terrorism became the focus—was to address the energy crisis. He said we need a fundamental change, a top-to-bottom review, and he gave the impression that he was ready to contemplate rather substantial innovations. But he picked Dick Cheney, an oil man, to run this review, and Cheney chose only to consult people in the oil industry, primarily Kenneth Lay and people from Enron. No environmentalists.
What they essentially decided—secretly, because the administration has refused to make public any of the minutes of these meetings—to perpetuate the existing energy system for another 20 years at massive public expense, rather than to consider the proposals coming from the environmental community to shift very rapidly towards energy alternatives.
...This is the one thing that makes me hopeful—that the American public is beginning to grasp all that we’ve been speaking about, both from a national security and an environmental perspective. These two things are coming together. I think the public is very reluctant to get involved in more foreign wars, especially in the Middle East. And they understand, implicitly, that we go to war in the Middle East because of oil. And if we don’t want to go to war in the Middle East, then we have to do something about the oil problem. And I think that view is gaining ground in the U.S. And at the same time concern over global warming is growing, which also leads to reduced petroleum use. I do see these two things coming together, and I do think they’re altering the political landscape in this country.
(19 June 2006)
EIA: International Energy Outlook 2006
EIA press release
Worldwide marketed energy consumption is projected to grow by 71 percent between 2003 and 2030, according to the reference case projection from the International Energy Outlook 2006 (IEO2006) released today by the Energy Information Administration (EIA). The IEO2006 shows the strongest energy consumption growth in developing countries outside the Organization for Economic Cooperation and Development (OECD), especially non-OECD Asia (including China and India), where robust economic growth drives the increase in energy use. Energy use in non-OECD Asia nearly triples over the projection period (Figure 1).
Projected reference case world oil prices are 35 percent higher in 2025 than in last year’s IEO, reflecting a more pessimistic view of the willingness of oil-rich countries to expand production capacity as aggressively as previously envisioned. The higher prices dampen expected growth in world oil demand, which is 8 million barrels per day lower in 2025 than in last year’s reference case. As a result, oil’s share of total energy use is projected to fall from 38 percent in 2003 to 33 percent in 2030, whereas natural gas and coal both gain in their share of total energy (Figure 2). Petroleum consumption is still expected to grow strongly, however, reaching 118 million barrels per day in 2030. The United States, China, and India together account for 51 percent of the projected growth in world oil use.
Members of the Organization of Petroleum Exporting Countries (OPEC) are expected to increase their supply of oil by 14.6 million barrels per day between 2003 and 2030. Higher oil prices contribute to a substantial increase in projected non-OPEC supply, which rises by 23.7 million barrels per day, including 8.1million barrels per day of unconventional production, over the same period. World unconventional production (including oil sands, bitumen, biofuels, coal-to-liquids, and gas-to-liquids) increases by 9.7 million barrels per day between 2003 and 2030, representing 25 percent of the total world liquids supply increase.
Other report highlights include:
- Coal use grows at an average annual rate of 2.5 percent between 2003 and 2030 in the IEO2006 reference case projection, while demand for natural gas grows by 2.4 percent per year. The higher oil prices used in IEO2006 increase the competitiveness of these fuels. Rising fossil fuel prices also allow renewable energy sources to compete more effectively in the electric power sector. Consumption of hydroelectricity and other grid-connected renewable energy sources expands by 2.4 percent per year.
- Higher fossil fuel prices and concerns about security of energy supplies are expected to improve prospects for nuclear power capacity over the projection period, and many countries are expected to build new nuclear power plants. World nuclear capacity is projected to rise from 361 gigawatts in 2003 to 438 gigawatts in 2030, with significant declines in capacity projected only for Europe, where several countries have either plans or mandates to phase out nuclear power, or where old reactors are expected to be retired and not replaced.
- In the IEO2006 reference case, which does not include specific policies to limit greenhouse gas emissions, energy-related carbon dioxide emissions are projected to rise from 25.0 billion metric tons in 2003 to 33.7 billion metric tons in 2015 and 43.7 billion metric tons in 2030. Much of the projected increase in emissions is expected to occur in the non-OECD regions of the world, accompanying large increases fossil fuel use. Non-OECD countries accounts for three-fourths of the projected growth in emissions between 2003 and 2030 (Figure 3).
The full report can be found on EIA’s web site at:
(20 June 2006)
Sorbeh Karbuz writes:
On p. 29: "For the period out to 2030, there is sufficient oil to meet worldwide demand. Peaking of world oil production is not anticipated until after 2030."
EIA still ridiculously makes apples and oranges additions - 20 years old UGSG data to 2006 proved reserves.
For a quick reference to figures in the document see a power point presentation by Guy Caruzo:
For an excellent breakdown of the - as yet unaddressed - problems with the international energy agencies' approach, see The Countdown for the Peak of Oil Production has Begun – but what are the Views of the Most Important International Energy Agencies by W. Zittel, J. Schindler, L-B-Systemtechn.
See also Donald Fournier's comments below.
Donald Fournier: Oil depletion and the US Army (Audio)
David Room, Global Public Media
GPM correspondent David Room talks to Donald Fournier, co-author of the report Energy Trends and Their Implications for U.S. Army Installations (pdf).
DR: And what makes you confident in the predictions from ASPO as opposed to those of the USGS or IEA?
DF: When we started this report we went out there and did a literature search and tried to see what people were saying. And you look and you read and you buy your books and you download things off the internet, and you try and see who sounds like their story makes the most sense. I looked at the writings of Colin Campbell, I listened to his interviews, I read Simmons, I read Deffeyes' book, and I looked at all these things and sort of made a judgment call. I read also Jean LaHerrere's review of the USGS report, and what struck me is the fact that if all this oil is out there, why aren't we finding it? You know, we're not finding that North Sea every year. I'm a shade on the pessimistic side, also at the same time I think being more pessimistic is actually--, if I can deal with the pessimistic side, if there's a greater supply out there then fine and dandy, as far as that goes. But if you look into alternatives and you're looking at the price of oil, certainly worldwide production is not keeping up with worldwide demand, therefore the price is going up -- and that's pretty telling to me.
We don't really have to reach peak to experience the economic dislocations that are coming from increasing energy costs. So my feeling is enlightened self-interest should be what comes to play here. And as a matter of fact, if people get very serious about energy efficiency and alternate energy sources and more efficient vehicles and all these kinds of things, we can maybe bring the demand back down below what the supply is and then see price reduction. So I feel it's sort of like a win-win scenario, if you will, or a win-win-win: if you reduce your costs, reduce your environmental impact, you'll increase your security by being more efficient. And so, you know I also believe in Murphy's Law. Forewarned is forearmed, if you will. So I looked at what was out there, read the 2000 report from the USGS and read the commentary on it and made the call that I lean more toward ASPO's camp.
(4 April 2006)
The transcript for the audio interview has just been posted.
The Commodity Boom
David Petch, Free Market News Network
The commodity boom currently underway in all areas is due to shortages. Shortages are the result of different circumstance depending upon the commodity. Different commodities will be examined but all stem from a common thread and will only be amplified by its shortages: Energy.
The most important source of energy is oil and related products. It is the most compact form of portable energy for easy use. Currently, around 25 billion barrels of oil/year are consumed and with China oil consumption increasing 2% year over year, over 500 million more barrels are required next year. If no other countries decrease their oil consumption, then there will be real felt shortages next year. The more and more I read about oil production and shortages (best book by far is “Twilight in the Desert” by Matt Simmons), this is going to be an extreme event. Current sources of oil are declining and India and China have economies growing at 9-10% per year, so unless more oil is found, prices will rise. There will be some point in the future where oil/gasoline prices will decrease consumption, but peak oil is looming and any decline in consumption will be met with declining production. If this relationship holds for the next 15 years, then oil prices are likely to rise much higher. In North America (excluding Mexico, where 66% of their population is under the age of 30), Europe and Japan, demographics are kicking in and most people nowadays are extremely out of shape. What better to have cars take one to the grocery store, a gas powered lawn mower to cut the grass etc. etc. All of today’s inventions are designed to make life easier, so baby boomers are likely to simply grumble at the pump and pay for now.
It is amazing how much gas is used to keep lawns trim. On a Sunday afternoon when one person starts to cut their lawn, all the lazies (myself included) hear the sound and think “better get out and cut the grass before the city comes and cuts it. Within on hour, there is a smell of gasoline all over the neighborhood. My neighbor has a push mower and I plan to get one, but I have to find a good one, but am on the prowl. Oil is not only going into cars, but it is an essential requirement for increase in GDP. When peak oil hits, GDP of each nation potentially stands to collapse, so intense control for remaining oil will likely occur. A contraction in global GDP will result in an implosion of export items. Economies will quickly revert to localized economies rather than a global economy, simply because there will not be an energy infrastructure in place to support it. There always will be global trade, but as in the past, that market will be for the rich. This is over the course of the next few decades, but the changes down the pike are going to be fast and furious...
As peak oil hits, countries will continue to nationalize assets to protect their own interests. In the mean time, there is money to be made by companies in politically secure areas of the globe. Once the debt bubble from around the world is popped, make sure bullion and money are stored away from banks.
(19 June 2006)
BA notes: "I note that Soros associate Jim Rogers is also predicting a long-term boom in commodities. As with all investment advice, one should read widely and make up one's own mind. "
Still this article seems well researched, with a good short summary of North American natural gas, tar sands, water and peak copper. -AF
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