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The guns of August (redux)

The guns began early. By mid-July, Israel and her various adversaries were locked in combat with bombs falling, rockets flying, reserves mobilizing and casualties mounting. As the fighting increased, observers noted the similarities between the assassination of Archduke Ferdinand in 1914 and the provocative abduction of two Israeli soldiers by Hezbollah this month. In 1914 repercussions from the assassination quickly spread to engulf the major European powers. The ensuing wars and their aftershocks continued for the rest of the century. Europe was never to be the same again.

This time, it does not take much imagination to envision passions rising higher and higher as Tel Aviv’s adversaries launch rockets at her cities and the Israeli Defense Forces bomb, fire off barrages and launch armored incursions in return.

Currently, there is much discussion of a UN/EU/NATO or whatever “peacekeeping” force being sent to Lebanon . The usual UN contingents from small and innocuous countries clearly are not up to dealing with the situation is southern Lebanon . Peacekeeping there is likely to be far more difficult than the typical UN observer mission of recent years.

The Israelis, of course, will heartily approve the arrival of outside peacekeepers in southern Lebanon as they can turn the whole mess over to somebody else. Hezbollah, of course, will find that Jihad and martyrdom will work against peacekeepers just as well as Israelis. It is difficult to conceive the current level of conflict going on for long without dragging in some Middle East country with oil wells and then, the world will change.

Given the lack of spare capacity in the world’s oil market, any slowing or cessation of oil exports from the Middle East, no matter what the cause, would rank anywhere from a major catastrophe on up, should all or most of the Middle East’s oil exports be shut-in for a prolonged period.

Is this likely to happen? All we can responsibly say is the chances are a lot better than they were around the 4 th of July.

Putting aside Lebanon for a minute, what are the best thoughts about oil production peaking in the near future? First, let’s note that the average price of gasoline in the US recently hit a new all-time high of $3.02 (unleaded regular).

Last week in Pisa , Italy , there convened a meeting of several hundred people belonging to some 19 national Associations for the Study of Peak Oil. They met to review the situation and to exchange the latest thoughts and research.

There is a growing sense of urgency as oil depletion, global warming, debt burden and peak food all seem to be coming together as part of the same interconnected, looming disaster. Oil and gas depletion is real. It’s very close if not here already, and it’s going to be bad. Around the world most governments are not taking the issue seriously and in fact, are largely in denial, disseminating bad information about oil reserves and the possibility of future production increases.

A number of people continue to work on the question of just when and at what level world oil production is likely to peak. The most prominent of these researchers, Chris Skrebowski of the UK ’s Energy Institute, has reworked and expanded the scope of his research during the past year. He now believes that, unless some major geopolitical interruption takes place, world oil production will peak in late 2010 at somewhere around 93 million barrels a day (b/d). Current production is 85 million b/d.

Although a few prominent observers are still talking about the peak coming in 2015 or 2020, Skrebowski is one of the few independent analysts who actually has done a field by field, year by year, inventory of depletion vs. likely new production.

If one is optimistic then you assume that none of the brewing geopolitical crises —Lebanon, Iraqi meltdown, Iranian enrichment, Nigerian militancy, Venezuelan nationalism — will actually lead to a significant reduction in oil exports during the next few years. If this turns out the be the case, then Skrebowski’s estimate of 1,500 days from now seems like a reasonable upper limit for the period within which peak oil is likely to occur.

The most important theme to emerge from the conference was reinforcement of the notion that oil “reserves” are an academic exercise, and that only ability to produce and deliver oil counts. Given the increasing scarcity of production resources and rapidly increasing costs of getting oil from the dark and frigid places where it is being found these days, a peak of 93 million b/d circa 2010 is more likely to be too high than too low.

So there you have it. The best students of peak oil currently put the peak somewhere between last December and 1,500 days hence. Moreover, Hezbollah vs. Israel has an excellent potential to spin out of control resulting at best in a significant reduction in Middle East oil exports.

The last piece of bad news is to keep in mind that the most active period of the hurricane season starts next week.

What do you think? Leave a comment below.

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