Note: The following is a modified version of a previously unpublished article, which was originally written in January-February 2008. In general, the revisions have not attempted to incorporate references to more recent events or production data.
Abstract: It is sometimes held that U.S. motivations in Iraq and the Persian Gulf, while indeed “largely about oil” (in the well-publicized words of Alan Greenspan), are not (or at least not much) “about access” to the region’s oil per se. This essay critically examines that claim, arguing that the current U.S. resort to force cannot really be understood without regard to the current precariousness of U.S. energy supplies.
“What they care a lot about … is having military bases in a dependent client state right in the heart of the oil-producing region. That’s important. Not because the U.S. wants the oil – it’s going to get it one way or another on the market – but it wants to control the oil, a totally different matter. Those things are constantly obscured. Control of the oil, it has been known since the 1940s, is a major lever of world control against your enemies. And U.S. enemies are Europe and Asia. Those are the regions of the world that could move toward independence. One of the ways to prevent that is to keep your hands on the spigot. It was understood long ago.”
Noam Chomsky, interview with David Barsamian, 2004
“A tertiary concern is access. That’s much less of a concern. One of the reasons is that the distribution systems are pretty much in the hands of big energy corporations anyway and once oil is on the high seas, it can go anywhere.
So access is not considered a major problem. Political scientists, when they make fun of the idea that the U.S. invaded Iraq to gain its oil, they point out that the U.S. can get Middle East oil in other ways so therefore that can’t be the reason. That’s true, but it’s irrelevant because the true issues are and always have been control and secondarily profit and in fact U.S. intelligence projections for the coming years have emphasized that while the U.S. should control Middle East energy for the traditional reasons, it should rely primarily on more stable Atlantic basin resources, namely West Africa and the Western hemisphere. They’re more secure, presumably, and therefore we can use those, but we should control the Middle East oil because it is a stupendous source of strategic power.”
Noam Chomsky, interview with Samir Dossani, 2007
“It is not a matter of access as people often say… In fact if the United States used no Middle East oil, it’d have the same policies. If we went on solar energy tomorrow, it’d keep the same policies. Just look at the internal record, or the logic of it, the issue has always been control. Control is the source of strategic power.”
Noam Chomsky, interview with Michael Shank, 2007
For antiwar activists, the goal of moving beyond the vague “about oil” claim to an understanding of the specifics is a worthy one. Unfortunately, Paul Street’s recent attempt to flesh out the oil motive in part by developing themes often articulated by Noam Chomsky (“Largely About Oil,” Z Magazine, January 2008), like most other commentary reaching the general public, continues to ignore key facts of the evolving energy situation – a pattern which no doubt reflects the wider cultural inclination not to inquire too closely into the transitory underpinnings of industrial civilization.1
While these remarks will be critical, they have obviously benefited from the useful springboard occasioned by Street’s article, which has helped me to organize long-simmering thoughts on the subject.
The oft-reiterated thesis can be stated in compressed form as follows: the U.S. goals are (1) strategic power issuing from control over oil supplies to others and (2) profit flows from Persian Gulf oil producers back to U.S. banks, construction contractors, weapons manufacturers, etc., far more than (3) access to Middle East oil itself – or, as Street puts it, the goal is “something more fundamental than filling up gas tanks.” There’s a lot to be said for the first two motives, though more careful attention to the objective situation and a less blinkered view of the concerns being articulated near the top (generally to small audiences) are arguably needed to understand their true meaning in the current context. To my mind, the deliberate and repeated downplaying of the third seems like a poor excuse for not doing one’s homework.
The fact is that U.S. capitalism – not to mention the entire living arrangement – is utterly dependent on the gas tanks continuing to be filled, though in the long run this is obviously an impossible expectation. In fact, the short-run prospects aren’t looking very good either.
Some highlights: Consider the top five sources of U.S. net oil imports (2006): (1) Canada imports more than half the quantity of oil it exports to the U.S., so that what the U.S. could “realistically” count on in a supply crisis would put it in fifth place rather than first.2 Its conventional production, both western and eastern, has peaked. Atlantic Canada’s largest field, Hibernia, is already down 35% from its 2004 peak, with the two other “plays” in the region set to follow. Don’t expect slow, expensive, natural-gas dependent, greenhouse-gas intensive Tar Sands to make up the difference for more than a few years. (2) Saudi Arabian production and exports have remained below 2005 levels despite greatly increased drilling activity, much of it connected with expensive efforts to obtain high flow rates from fields that have performed poorly in the past compared to the mainstays (an indication of what they have left to choose from). Northern Ghawar, the veritable core of the Saudi miracle, is now in net decline, as is evident not only from the detailed work of analysts like Stuart Staniford, but even from public statements by Aramco and OPEC officials.3 (3) Mexico’s Cantarell field, in recent years the second most prolific in the world and responsible for 60% of Mexico’s total output, is now declining at something like 20% per year – which threatens to eliminate that country’s entire export capability within three to five years, with potentially devastating impacts for Mexico as well.4 (4) Venezuela is also evidently in long-term decline, though not so precipitously. But it is making moves to sell its oil elsewhere, notably to China – as are Canada and Saudi Arabia (as Chomsky for one has recently noted in his “Afterward” to Failed State ). (5) Nigeria, though much of its production base is quite mature, could yet see some further production growth, mainly in expensive deepwater, at the expense of sharper declines later – though the MEND insurgency may make that possibility moot.5
As for views at the top, Street and Chomsky rightly assume that motives attributed to Russia, Venezuela or Saddam Hussein, namely the use of control over oil supplies as a lever of power, are appropriately attributed to U.S. designs as well.6 A consistent policy would make a similar assumption with regard to the access motive, particularly given the actually emerging situation. Consider, for example, Condoleezza Rice’s talk about “the warping now of diplomatic efforts by the all-out rush for energy supply.” Or these words from Sir David Manning, considered Blair’s “chief foreign policy adviser” and Britain’s “real foreign secretary” in the lead-up to Iraq, and lately Ambassador to Washington: “As resources contract, oil-hungry economies will compete for dwindling supplies of hydrocarbons.” Similar statements by Henry Kissinger, Senator Lugar and many others may be cited.7 A reasonable interpretation of such statements is that the U.S. and U.K. are themselves now engaged in an all-out rush for dwindling supplies of hydrocarbons.
And that all-out rush applies to every potential source of future supply, not just the Middle East. For example, the US-UK Energy Dialogue quietly set up by Bush and Blair at the same April 2002 Crawford summit which resulted in headlines like “Iraq Action is Delayed but ‘Certain’” was explicitly concerned with “security and diversity” of supply, with working groups focused on Africa, the Middle East, the Caspian and Central Asia, and Russia.8 In April 2004, Deputy Secretary of Energy Kyle McSlarrow told a CSIS conference: “Today what we’re trying to achieve I think can best be captured by the phrase ‘diversity of supply’. And tomorrow, that is, the long term, 20 years and out, I think can best be captured by the phrase ‘diversity of fuels.’” In February 2006, former Commerce Secretary Don Evans told the host of Hardball bluntly, “Chris, what we’re going for is a diversified energy source.” Of course, Administration talking point themes carry little inherent weight, but these ones seem to fit the facts. The work of the U.S. European Command in setting up a “Caspian Guard” and an 11-nation maritime agreement in West Africa are also relevant in this context. The latter efforts culminated in the establishment of the Africa Command within the U.S. armed forces in December 2006. It’s hard to see these initiatives as being other than primarily about future access to hydrocarbons. The same is true of the US-UK Energy Dialogue’s interest in helping Angola and other countries develop infrastructure to sell their natural gas rather than flare it, Bush’s diplomacy in Brazil in search of cane-ethanol, and the U.S. urging of a “five-fold” increase in Canadian Tar Sands production (the latter pure fantasy, of course, but perhaps born out of desperation). Why the concern in the Middle East should be radically different hasn’t been adequately explained – which, again, is not to deny that the more traditional motives may be at work as well.
The reasoning and evidence that have been offered against the access motive with regard to recent Middle East policy have not been particularly impressive. For example, the claim that “one way or another [the U.S.] is going to get [the oil] on the market” is transparently false, a conclusion which follows immediately from the enormous reliance on an exhaustible resource, not to mention a comparison with the objective situation now. The fact that mainstream “political scientists” and astute critics of the war alike have failed to recognize this is a commentary on a culture in which energy is taken for granted.
Then there are the arguments appealing to what U.S. policy was when it used little Middle Eastern oil, or the hypothetical variant about what U.S. policy would be if it used no Middle Eastern oil. These arguments may help explain the continuities, which certainly exist, but could equally well be offered as a base from which to argue that the access motive figures more significantly now than previously. They are also silent on the major discontinuity that actual military occupation of a major oil-producing country entails.
Incidentally, the exact scale of U.S. reliance on Persian Gulf oil is unknown, since substantial quantities of that oil are encompassed in the official statistics under such headings as “Canada,” “U.S. Virgin Islands and Puerto Rico,” and “Caribbean.”
Chomsky does offer one bit of evidence adduced as applying to the current situation, namely his reference to “U.S. intelligence projections for the coming years,” which he has cited in various renditions of the not-about-access claim over the past few years.9 His reference is to a December 2000 report by the National Intelligence Council, based on consultations with non-governmental experts, entitled Global Trends 2015. The report projected that a 50 percent increase in global energy consumption by 2015 would “pose neither a major supply challenge nor lead to substantial price increases in real terms.” Here is one of the two key sentences on which Chomsky’s claim rests: “Asia’s energy needs will be met either through coal from the region or from oil and gas supplies from the Persian Gulf, Central Asia, and Russia.” As for the other, the report doesn’t precisely say that the U.S. will rely on Atlantic Basin sources, as in the quotations with which this article began. Rather it says, “Western Europe and the Western Hemisphere will draw on the Atlantic Basin for their energy sources at world prices.” So the report has Asia relying significantly on the Persian Gulf for its future energy supplies, and Western Europe and the Western Hemisphere mainly on Atlantic Basin sources. Chomsky’s claim that the report supposed that the U.S. needed to control the Middle East in order to preserve its traditional strategic leverage is evidently inferential, based on the report’s factual assumptions about who would actually need to rely on the region’s oil and who would not, as here quoted, coupled with U.S. actions which are plain to see. Note that at best, the report’s assumptions support the idea that the U.S. was pursuing strategic control over Middle East oil supplies with respect to a new target – industrializing Asia. But even that is granting too much. The premise that the U.S. and Western Europe have little direct stake in Persian Gulf energy supplies is just factually wrong.
And the premise regarding the sufficiency of Atlantic Basin sources is even more strikingly problematic. At the time these “predictions” were made, Western Europe’s only major internal “Atlantic Basin” source of energy – the North Sea – had already begun its rapid terminal decline, as was entirely predictable, and predicted, though this fact remains so obscure that the question of whether it could have played a background role in Britain’s participation in the Iraq war venture is not even asked. Greenland, from which the report predicted major production by 2015, remains completely speculative. Also in a similar vein and at about the same time, the U.S. EIA’s annual International Energy Outlook 2001 was proclaiming that Columbia and Argentina might soon join the list of million-barrel-a-day producers – when in fact the production of both countries had already entered terminal decline, as Roger Blanchard pointed out almost immediately. Skepticism with regard to Mexico and Canada was also quite in order, given the facts then available. Venezuela’s highest production year had been 1970, the same as the U.S. However one evaluates deepwater sources in the Gulf of Mexico, Brazil, and West Africa, the idea that these would both meet increasing demand and compensate for declines elsewhere without “major supply challenge” was and is preposterous. The most productive deepwater fields produce on the order of a tenth the rate of Cantarell at peak and then decline rapidly.
Standard official energy forecasts serve an ideological function, that of assuring the society that its “capital” projects can proceed, a function which in its own way as important to the smooth operation of a society organized around the assumption that debts will be repaid as access, control, or profit – so long as we can ignore what this implies for the future. The facts are only relevant in so far as they force increasing contortions in carrying out this role. To cite just a couple of examples already well known among the oil-aware, as the EIA’s Annual Energy Outlook for 1998 put it (p. 217), “These adjustments to the USGS and MMS estimates are based on nontechnical considerations that support domestic supply growth to the levels necessary to meet projected demand levels.” In other words, first figure out how much will be needed, and then assume that that’s how much will be available. That same year, the IEA’s World Energy Outlook invented a new category of oil – “unidentified unconventional” – which it predicted would rise from zero to 19.1 million barrels a day by 2020, far surpassing the “identified unconventional,” which was expected to rise to a mere 2.4 million b/d (Table 7.12, p. 101). But it would be a mistake to assume that leadership deliberations are based on a blind acceptance of the face-saving conclusions of the official forecasting agencies. The U.S. leadership has evidently sensed rather keenly the conflict between reality and their goals, even if also laced with an irreducible residue of illusion, as will be illustrated as we proceed.
While there is no clear cut-off regarding the degree of fantasy that may be contained within a genuine intelligence assessment, the fact that Global Trends 2015 was a public document based on consultations with non-governmental experts; the fact that it adheres completely to the doctrinal requirement that all necessary energy supplies will be forthcoming, without major supply challenges; the fact that at roughly the same period of time at least three heavyweight task forces are known to have considered information of a more worrisome nature, their reports saying, in effect, that energy needs would met only with major supply challenges10 – these considerations together call that status into serious question.
In any case, by the time the next report in the same series, Mapping the Global Future, appeared in December 2004, significant backtracking from the earlier report’s undiluted optimism had occurred: “… many of the areas…being counted on to provide increased [energy] output involve substantial political or economic risk…. Thus sharper demand-driven competition… perhaps accompanied by a major disruption of oil supplies, is among the key uncertainties.” These were in fact the only highlighted words in the newer report’s energy section.
Furthermore, the Bush Administration surely has had access to a more nuanced picture of the “status of the Middle East as the world’s oil hub” (Street) than the timeless image the Left has been getting. Consider what information they could have gleaned from energy investment banker Matt Simmons, who was a key adviser to the 2000 Bush campaign on energy matters, and a respected source of information for at least some in the Administration thereafter11 By the late spring of 2001 he was noting that:
Even the Middle East is now beginning to experience, for the first time ever, how hard it is to grow production once giant fields roll over and begin to decline. There is so little data on field-by-field production statistics in the Middle East that any guesses on average decline rates are simply speculation. But there is growing evidence that almost every giant field in the Middle East has already passed its peak production.12
His study of the “World’s Giant Oilfields,” published in early 2002, showed what a high proportion of the world’s oil supply was still coming from aging supergiant fields that had been in production for 40-60 years. (In contrast, Prudhoe Bay, the largest oilfield ever discovered in North America, went into terminal rapid decline, at a rate of about 10 percent per year, only about 11 or 12 years after its first production). Specifically, it showed how reliant each of the Persian Gulf producers were on just a handful of old fields. Within weeks of his January 2003 trip to Saudi Arabia, he was publicly describing his skepticism about Saudi Arabia’s real capacity and prospects (Interview with Julian Darley, February 10, 2003). In February 2004 he first publicly presented the findings of his year-long study of Society of Petroleum Engineers papers, tracing the history of Saudi production problems on a field-by-field basis, and reinforcing his concerns about the prospects. In June of 2005 his book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy was published.
The Bush Administration’s concern with energy adequacy evidently dates back to Energy Secretary Bill Richardson’s trip to all of the OPEC countries (except for Iran, Iraq and Libya) in early 2000, dubbed the “tin cup” trip in the conservative media (and which also evidently had an “access” focus of sorts). The upshot, according to Simmons, who advised Richardson aide Melanie Kenderdine before the trip – and the Bush campaign afterward – was the finding that OPEC spare capacity had largely evaporated.13 In several interviews, Simmons has characterized the spare capacity issue as a central point of his communications with the Bush campaign and early Administration: “What I basically told them is that we had some looming energy problems because we’d run out of productive capacity. We’d basically in the 90s used up all of the cushions and yellow lights were going off all over.”14 That was also a key conclusion of the Baker Institute/CFR report of April 2001: “In fact, the world is currently precariously close to utilizing all of its available oil-production capacity, raising the chances of an oil-supply crisis with more substantial consequences than seen in three decades. These limits mean that America can no longer assume that oil-producing states will provide more oil.”
Spare capacity is a key concern. For example, it is what made it possible to adopt crippling sanctions against Mossadegh’s Iran (firmly in the exercising-of-strategic-veto-power category of action), and also the reason why the U.S. did not experience the 1973 Oil Shock in 1967 (U.S. oil production peaked in 1970, ending its ability to undercut any OPEC move to cut production). But by now, the realization that the game of musical chairs has begun no doubt overshadows even that concern. “‘We’re in a race with China and so far we’re losing,’ an administration source familiar with Cheney’s trip [to Central Asia] said” (Insight Magazine, May 16, 2006).
Or as Simmons told David Strahan in March 200315:
We’ve been a heavy importer of oil for two decades. But I think that it’s just the fact that so many of the areas that we used to rely on are showing signs of no longer growing and probably shrinking that gives rise to just an uncomfortable sense that we have a lot more serious energy problems to address than we’ve really thought about for twenty years.
Strahan: And the U.S. Administration is worried about that?
Simmons: Yeah, absolutely. [Italics added.]
In the face of these concerns, on the eve of the Iraq invasion the US-UK Energy Dialogue was proposing a “targeted study to examine the capital and investment requirements of key Gulf countries” (quoted by David Strahan). It is possible that the Administration in 2002 was acting on the belief that “When there is regime change in Iraq, you could add three million to five million barrels [per day] of production to world supply” (chief economist Lawrence Lindsey), though there was evidently also an emerging awareness of the fact that any such increase would have to be balanced against natural declines in the existing base of production – an awareness already demonstrated by Cheney in his well-publicized London speech in November 1999. My own guess is that a medley of influential perspectives was aired in the internal deliberations leading to the determination to invade Iraq. To merely list the ones concerning oil supply (no doubt there were non-oil considerations also entering into the mix), these would have included (1) the belief that large-scale investment under American tutelage could produce all the oil needed from the Middle East for a long time to come, (2) the perhaps more tongue-in-cheek productions of the official forecasters, (3) the long train of contingency plans which effectively said “if ever a problem with Middle Eastern supplies, invade,” and (4) more skeptical views with respect to (1), including the views of respected consultants like Simmons and Robert Ebel ( target=”_blank”>link), and quite conceivably critical information from the files from investigations of Iranian and Saudi oil prospects in the 1970s. Within the context of elite values, all of these would have favored the resort to force. Regarding (4), at least Simmons well understood before the invasion that Iraq’s largest reservoirs had been irreversibly damaged by production practices under sanctions, leading to “permanent loss of huge reserves of oil” (2000 UN Experts Report, as quoted by Strahan). This damaging overproduction is continuing under the occupation, as Chomsky has recently noted in his book Interventions.
In any case, by 2006 they were aware that “The world is producing oil, the Middle East, every country is at its full capacity and it’s very unlikely that we’re going to be able to see supply in the world grow from the levels where we are right now” and that according to US intelligence assessments “Middle East oil supplies will become increasingly precarious after 2008” (former Commerce Secretary Don Evans, italics added, and Insight Magazine, citing sources close to Cheney). And by the beginning of 2008 Bush himself was publicly questioning the ability of the Saudis and OPEC to raise production, saying (January 15, ) that “If they [the Saudis] don’t have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do.” And, at a press conference in Saudi Arabia the same day, he said “I hope that OPEC, if possible, understands that if they could put more supply on the market it would be helpful. But a lot of these economies are going — a lot of these oil-producing countries are full out.”
The background facts underlying these perceptions are also of considerable importance, given the high level of public ignorance which in this case extends to many of the (usually) more perceptive commentators. The common bedtime story goes something like this: “It has been known since the early twentieth century, when the world economy shifted to oil, that the largest and most easily accessible supply of energy resources is located in the Middle East. Over the years, the assessment of just how rich and easily accessible they are has escalated.” (Chomsky, Perilous Power, 2006, p. 53 – italics added.)
The grownup version of the facts is rather different. During the mid-1980s, the five major Gulf oil producers, absent any announcements of major new discoveries, raised their declared reserve figures by between 50 and 200 percent, literally, in each case, from one year to the next. Interestingly, the reserve figures for the Neutral Zone shared by Saudi Arabia and Kuwait saw no similar increase, and continued to be gradually adjusted downward in keeping with production until 1990, from which time they have officially been held constant – as have the figures that were subject to the massive increases.16 The usual motive attributed to the changes is internal OPEC competition for export quotas, which were based on claimed reserves. Indeed that motive is no longer even controversial. In October 2005, Adnan Shihab-Eldin, then Acting Secretary General of OPEC, admitted the existence in the 1980s of “that sort of race to declare higher figures for reserves, driven by the anxiety about the quota system, which everybody knows” – pleading only that other motives may have been at work as well, and that the higher figures should nevertheless be believed.
Some of the more knowledgeable commentators from the region are even more candid. For example, the Wall Street Journal reports (though without direct quotation) that Dr. Sadad al-Husseini, the former Saudi Aramco vice-president in charge of exploration, has endorsed the view that “The major oil-producing nations were inflating their oil reserves by as much as 300 billion barrels, about one-quarter of the world’s proven reserves.” The late Dr. Ali Samsam Bakhtiari, who was an outspoken retired National Iranian Oil Company executive, described the underlying state of affairs in his country as follows:
As for Iran, the usually accepted official 132 billion barrels [of reserves] is almost 100 billion barrels over any realistic assay. If the higher figure were for real, its oil industry would not be struggling day in and day out to keep output at between 3.0-3.5 million barrels per day (inclusive of Persian Gulf offshore).
In fact, Iran’s four largest oilfields all peaked between 1967 and 1977, as did the country’s production as a whole (1974), which means that its general decline cannot be just an artifact of political disruptions or lack of investment.17 Given its internal consumption, Iran is on track to lose its capacity to export oil by around 2015, as even the Wall Street Journal has reported.18
Regarding Kuwait, a January 2006 report in Petroleum Intelligence Weekly, based on an internal Kuwait Oil Company audit from 2001, put Kuwait’s reserves then meeting the standard of “proved” at 24 billion barrels – or a quarter of the official number – with combined “proved” and “non-proven” reserves amounting to half the number usually taken to represent “proved” reserves alone. Two months earlier it had also been publicly announced that Burgan – the second largest oilfield in the world, in terms of the amount of oil it started out with – could no longer sustain its plateau rate of 1.9 million barrels a day, with the chairman of the state-owned Kuwait Oil Company describing the field as “exhausted.”
In the crucial case of Saudi Arabia, key points to bear in mind are (1) if northern Ghawar, the source of over half of the country’s cumulative production, and until recently a similar proportion of its daily output, has now arrived at the phase of permanent decline, then by virtue of that fact alone, the common claims that Saudi Arabia could sustain significantly higher rates of production than it does now for any significant length of time are rendered most implausible. And (2) the most cursory look at the recent round of oilfield development projects – e.g. the as-much-as $15 billion price tag on the Khurais project – suffices to demonstrate the sharply declining quality of Saudi Arabia’s remaining prospects, contrary to Chomsky’s claim (implicitly applying to Saudi Arabia) that the region’s oil is now judged to be even more “easily accessible” than in the past.
Let us look into each of these matters a bit further. In April 2006, a Saudi Aramco spokesperson told Platts Oilgram that the gross decline of mature Saudi oilfields is about 8% per year, adding that further “maintain potential” drilling in mature fields, “combined with a multitude of remedial actions and the development of new fields, with long plateau lives, lowers the composite decline rate of producing fields to around 2%.” Here, the phrase “new fields” refers almost entirely to fields that were originally developed several decades ago, but where it is hoped that major re-workings will achieve both massively higher production levels and long plateau lives (notice the contradiction between the two objectives). But the implication is that even these are not enough to compensate for the declines in the mature fields – which is to say, Saudi Arabia has effectively peaked.19
For another revealing statement, we may once again turn to the same 2005 talk by OPEC’s Shihab-Eldin. He noted that Saudi Arabia “will be adding about 2.5 million barrels a day of additional capacity gross” by 2010, adding that “if you factor in the decline of 800,000 barrels a day expected over that period,” the increase of real capacity would be only around 1.5 million barrels a day. Notice first of all that increased “capacity” does not necessarily translate into increased production levels. The 2.5 million-barrel figure accords with other public information, notably Aramco’s official project timeline (excluding the post-2010 Manifa project). This implies that the 800,000 figure would be for net decline in mature areas – i.e. after “maintain potential” drilling and “remedial actions” in the mature fields themselves, which are not included in the new-project timeline. Gross decline rates in those fields – i.e. those that would occur in the absence of remedial actions – would be higher than this. Furthermore, the Platt’s article mentions new drilling in central Safaniyah and Zuluf, which are expected thereby to increase production. If true, that implies even larger net decline in the other mature fields. And since total production in Abqaiq and Berri combined cannot be more than 800,000 barrels a day, a fairly clear implication once again is that northern Ghawar must also be in net decline. Once again, the import of this is not that the new projects stand no chance of raising total output in the short term but that the glory days are over.
What then about the assessment of the remaining prospects? One powerful item of indirect evidence is provided by the 1979 Senate Foreign Relations subcommittee report entitled The Future of Saudi Arabian Oil Production. In the context of concerns over possible damage to Saudi Arabia’s best fields from pushing them too hard, by 1974 the Saudi government, which that year assumed a 60 percent stake in Aramco, had affirmed a policy of bringing newly discovered fields into production at an accelerated rate. Consider the contrast between these ambitious plans and their very meager results (the Ain Dar, Shedgum and ‘Uthmaniyah fields refer to northern Ghawar):
[I]t was felt that plans should be revised to include the development of the greatest number of oil-bearing strata in the various fields. At the same time reservoirs which had not yet been produced, and reservoirs which had recently been discovered, were to be developed within a specific timetable. In this connection, the interval between the discovery of oil in commercial quantities in an oil-bearing stratum and the commencement of producing it was not to exceed a period of 24 to 30 months, except in exceptional cases.
It was felt necessary to begin the preparation of such programs … to insure the integrity and optimum exploitation of all reservoirs….
On at least three occasions during 1975, 1976 and 1977, the Saudi Arabian Government’s objective to have as many fields developed as possible was reemphasized. Accordingly, Aramco was to take into consideration that production be reduced, if there was a need, from highly developed and old fields (Abqaiq, Ain Dar, Shedgum, ‘Uthmaniyah, Berri) and that the company continue and expand its plans for producing oil from remote fields and unused reservoirs.”20
So that was the plan. The outcome? Despite substantial exploration efforts and numerous small named discoveries, only four newly discovered fields seem to have come into production as a result of the determination to bring into production every new “discovery of oil in commercial quantities”: three small satellites of the Khurais field, and the light field Harmaliyah, off the eastern flank of Ghawar, all discovered in 1971-1973. All four have been produced only intermittently, having reportedly been shut in for long periods.
Subsequently, post-nationalization, only two notable developments of oil resources discovered post-1965 have occurred: one cluster of condensate-producing fields south of Riyadh (the Hawtah Trend), discovered beginning in 1989, the combined production from the first five of them having already peaked, according to Simmons, at about 200,000 bpd, and one remote supergiant, Shaybah, in the Empty Quarter, amid enormous sand dunes, discovered in 1968 though not brought on line until 1998-99. That’s it.21
That leaves us with Shaybah as the best-of-the-best among post-1965 discoveries in Saudi Arabia. Currently, it produces around 500,000 barrels a day. Dr. Nansen Saleri, one of the Saudi Aramco officials sent to Washington in February 2004 to present the bright side of Saudi prospects when they were beginning to be disputed publicly by Simmons, mentioned in the question-answer period that vertical wells in the Shaybah field would have produced only 300 barrels a day – a figure he repeated for emphasis. To be fair, he offered this information in order to contrast it with the far higher flow rates achievable initially in Shaybah using the latest-generation Maximum Reservoir Contact wells. But his comment is revealing in another way. According to a 1978 GAO report reviewed by Simmons, Saudi Arabia was at the time producing 9.2 million barrels a day from less than 800 (at the time, exclusively vertical) producing wells, which implies that an average well was producing at least 11,500 barrels a day (other estimates of well productivity dated between 1970 and 1980 are quite in line with this figure).22< Thus, a typical vertical well in Saudi Arabia’s average field thirty years ago was more than thirty-five times as productive as the same well would be in Saudi Arabia’s best new prospect today. This speaks volumes to the easy accessibility of Saudi oil and how it has changed.
Returning to the foreign policy context that is the subject of Street’s article, in the case of Iraq there is a question regarding the proper standard of comparison in assessing the outcome of the invasion of Iraq as it concerns Iraqi oil production – as this can be at least suggestive regarding the goals. When Street quotes Greg Palast to the effect that through its influence with the Bush Administration, “big oil has done its best to keep Iraqi oil buried in the ground to keep prices in the air,” one might suppose a chain of reasoning as follows: (1) the Bush Administration knew that if sanctions were lifted, and if foreign investments in Iraqi oil were allowed to proceed, Iraq might add three to five million barrels a day to the world market, thereby causing a glut harmful to the interests of their friends in the oil industry, (2) “The invasion and the resistance it predictably engendered has dramatically stifled Iraq’s oil flow, contributing to a tripling of the profits of the five leading U.S. oil corporations between 2002 and 2005.” Therefore, assuming rationality, this dramatic stifling of production must have been one of the goals of the invasion.
Here readers may be excused for assuming that something like premise (1) is implicit in Street’s phrase “dramatically stifled.” But again assuming a rational relationship between Administration beliefs and the objective facts in an area of intense concern, the Administration could not have known any such thing – notwithstanding the proclamations of Iraqi exiles in London and officials such as Lindsey in their less rational moments. Something like 80 percent of Iraqi production has come from four supergiant fields – Kirkuk, North and South Rumaila, and Al-Zubair (call them KRZ, for short), fields which have been in production for fifty to eighty years, and in terms of ultimate recovery volume, were known to have been significantly damaged by the way they were managed under sanctions, so these fields simply must be expected to yield flat production at best. In a slow-moving industry, that situation alone does not augur well for spectacular increases of the sort advertised in the PR materials. A rational assessment might have held that non-KRZ production – the current 20 percent – had potential for long-term growth given sufficient investments in new, undeveloped fields (for which some of the quoted estimates for reserves look suspiciously like in-place volumes), maybe even resulting in increased total production for a shorter length of time. With a high degree of uncertainty, Iraq’s undeveloped potential could have been judged in 2002 as among the better of the remaining prospects in the world. In view of what is known, far from having acted to suppress Iraqi production, the charge that Iraqi fields continue to be overproduced as a short-term expedient at the expense of the longer term, begins to make sense – despite production levels being below what they were before the invasion. And it is worth bearing in mind that Iraq has remained roughly the United States’ sixth largest source of oil imports – about where it stood before the invasion.
All things considered, the U.S. leadership may well have hoped for increased Iraqi output through new field development, preferably under the loving and profitable attentions of U.S. “suitors for Iraqi oilfield contracts” – but most certainly not under the jurisdiction of dedicated long-term supply deals between China and an independent Iraqi state.23
Talk of relatively “more oil-dependent regions like Western Europe and East Asia” is standard media fare, which Street uses for his own purposes. But other meaningful comparisons are possible, notably the status of the U.S. in absolute terms as the world’s leading oil importer by far, its extreme car-dependency, and the fact that the U.S. and Britain are in a sense at the far end of supply lines from the Middle East, Russia, and sources of LNG. In 2005, one war game under the auspices of the U.S. European Command considered a scenario in which a Russian natural gas pipeline was attacked. “The result: power failures across Britain.”24 (In the background, UK North Sea oil production has declined more than 40% since peaking in 1999, while natural gas production has declined some 30% from its 2000 peak.)
The LNG issue is also of possible significance with regard to assessing the “access” motive in the Middle East.
By way of introduction, U.S. natural gas production is also generally recognized as being in long-term decline, after having risen to a secondary peak in 2001 by means of various non-conventional sources and methods of production and the opening of new areas to drilling (the all-time peak occurred in 1973). The last couple years have seen renewed increases, reflecting “a continued aggressive ramp-up in drilling,” and major developments in several new areas, but “Few in the industry … expect that these increases can be sustained for any extended period” (Andrew Weissman), given the clear trend toward lower productivity per well. Meanwhile demand has been rising sharply, largely due to the construction in the U.S., since the late 1990s, of new electrical generating capacity roughly equivalent to the total current load of Germany, Britain and France combined – nearly all of it natural gas fired. This occurred after the repeal of the Fuel Use Act, passed in the wake of natural gas shortages in the winters of 1976-1977 and 1977-1978, and after a major 1999 report by the Natural Petroleum Council predicted abundant future natural gas supplies. Weissman has called this massive construction program “a colossal mistake, one of the greatest public policy failures of our time.” Supply and demand have been kept in precarious balance mainly due to mild weather and a reduction of industrial natural gas demand by roughly 16% over five years – which mostly means natural gas-intensive industry, such as fertilizer production, shutting down or moving overseas.
Similarly Canadian natural gas production has also peaked and maintains itself almost on a plateau only by means of ever more rapid drilling. Canada’s continued willingness to export 60% of its total production, as it is required to do under the terms of NAFTA, is also an open question, given its own domestic needs in what is admittedly a cold climate, where homes have been designed, as in the U.S., on the basis of fuel supplies presumed to be inexhaustible. This does not even take into account the inherent conflicts between natural gas production and exports and Tar Sands production and exports. One can be maximized only at the expense of the other. Mexico is already a net importer of natural gas. As for the global situation, natural gas production is already generally plateaued or in decline in the U.S., Canada, Russia, the U.K., the Netherlands, and Indonesia, countries together accounting for 65% of current global supply. Moreover, much of the remaining gas is of uncertain provenance and in remote places that will require great expense and long lead-times to bring to market (e.g. arctic sources such as northern Alaska, Canada’s McKenzie River delta, and Russia’s Yamal peninsula)25, while the creation and transportation of LNG entails large losses in delivered quantities compared to what comes out of the wellhead – maybe up to a third. Factor in the expected increase in resource competition and resource nationalism, and what this all adds up to is a peak in global gas supplies well before the fifty percent mark of the global resource base has been consumed – even if the doubtful estimates of the latter ultimately prove to be realistic – due to practical considerations. In essence, that means now.
Admittedly, there is divergence of opinion on the matter. Some hold that if certain MIT labs get their funding approved then “There may be enough natural gas on earth to meet our energy needs for thousands of years” (Technology Review, January 2002). I’ll leave it to Professor Al Bartlett to handle that one.
And so the U.S. finds itself with a “need” for greatly increased LNG imports. According to the EIA’s Annual Energy Outlook 2002, LNG imports were “not expected to become a major source of U.S. [energy] supply.” Three years later the same publication was assuming “a compound annual growth rate for imports of LNG, beginning in 2008, of 12.2% per year – more than 5 X the expected growth rate for imported oil,” in the words of Andrew Weissman – despite the fact that “the output of most existing LNG projects and all but a small share of the output from the limited number of projects that currently are under construction in various parts of the world already is committed to other purchasers on a long-term basis” (Weissman
Such facts as the latter are hardly relevant to the EIA forecasts themselves, which serve a significant ideological function as already suggested, but they could well be relevant to current leadership concerns.
Thus, according to Matthew Simmons, Bush himself was looking at “the decline curve in natural gas” in the spring of 2001, which is the reason why the “drilling boom” for natural gas then underway failed to significantly increase supply, despite well completions nearly doubling in the two-year period. The Baker Institute/CFR report of April 2001 clearly perceived that the U.S. “may soon for the first time become reliant on sources outside North America for substantial amounts of natural gas.” Former Fed Chairman Alan Greenspan, in his first appearance before the U.S. Senate after leaving his post in 2006 – a fact which, as Senator Lugar pointed out, is indicative of the importance that Greenspan attaches to the energy situation – noted that “For a generation, we had looked to Canada for piped gas for about a sixth of our needs, and we were growing reasonably well and price was low – I remember when it was $2 per MBTUs. The problem is that the only outlook we really have got [now] is liquefied natural gas.” Being typically vague, he didn’t say what had changed in the meantime, but it was surely reasonable for him to assume that the Senators whom he was addressing understood that Canadian and U.S. lower-48 production had effectively peaked. He then identified three major problems that stand in the way of increased LNG imports: (1) “a goodly part of the liquefied natural gas market is on long-term contract around the world,” (2) traditional U.S. sources in Trinidad and the Caribbean have inadequate prospects for expanded output and therefore “the size of what we are going to need and can very readily use right now has got to come from Qatar or the Middle East or from other sources,” with whom “we’ve got to … hopefully get longer-term contracts,” and (3) the not-in-my-backyard opposition to building re-gasification terminals in the U.S. If we can meet these challenges, he averred, “we will then have the capability of converting gas into liquids with the new technologies that are coming on and this could be another source of replacement of petroleum,” which will be needed for some unstated reason. He further underlined how important the LNG issue is “for our national security and for the maintenance of, essentially, a car fleet on the roads …eventually fueled by the liquids we can derive from natural gas,” – at an additional large cost in deliverable energy above the third or so lost in creating and transporting the LNG – “provided we’ve got adequate capabilities to purchase it and import it,” now that we have finally identified an inexhaustible energy source.
Delusions aside, the tension between the long-term contracts that others have and the long-term contracts that we need is plain, as is the location of the proposed source – whether it is real or not being another question, once again, a matter to which we shall return.
It’s no doubt true that “US. planners know very well that modern armies and navies depend heavily on petroleum and that controlling Middle Eastern oil is a way of limiting energy access to potential global military rivals – the Chinese above all,” as Street says. But equally, the U.S. military is itself totally oil-reliant. With fuel constituting 70 percent of the tonnage moved into “theater,” one may presume that U.S. planners are also considering the need for local pumping stations as a condition for the continued projection of military power.
Innumerable statements testify to a clear concern at the highest levels over the threat to business-as-usual that energy-supply shortages pose. Just look at Alastair Campbell’s memoirs for a sampling of Blair’s concern over the fuel price protests in Britain in September 2000, where blockages at refineries resulted in the country virtually shutting down, supermarket shelves bared within days. On this side of the Atlantic, Bush said in May 2001: “What people need to hear, loud and clear, is that we’re running out of energy in America,” taking issue with those whom he said “believe that without finding additional supplies of energy, this nation is going to be okay.” The same month the National Energy Policy Development Group (Cheney Task Force) noted that “Our prosperity and way of life are sustained by energy use.” It further noted that “Estimates indicate that over the next 20 years, U.S. oil consumption will increase by 33 percent, natural gas consumption by well over 50 percent, and demand for electricity will rise by 45 percent. If America’s energy production grows at the same rate as it did in the 1990s [i.e. hardly at all, with oil in outright decline] we will face an ever-increasing gap.” Since “we recognize that a significant percentage of our resources will come from overseas,” “Energy security must be a priority of U.S. trade and foreign policy.” A month earlier, Matthew Simmons told a Senate committee – one day after he had personally summarized the contents of his testimony in a private meeting with President Bush – that
We are now in the early stages of the most serious energy crisis this country has ever faced. It will become more serious over time and if we do not correct the severe energy problems we now face, America’s economic future is grim. As the energy crisis unfolds, it could become the most critical threat to our economy since World War II.
A few weeks before that, Energy Secretary Spencer Abraham said, “America faces a major energy supply crisis over the next two decades. The failure to meet this challenge will threaten our nation’s economic prosperity, compromise our national security, and literally alter the way we lead our lives.”26
By 2006, we had former Secretary of State George Shultz asking plaintively “How many times do we have to be hit on the head with a two-by-four before we make a determined effort to use less oil?” – clearly linking oil use with the blunt object metaphor. A report issuing from the second Oil Shockwave exercise, conducted behind closed doors at the 2006 World Economic Forum, with the participation of ranking former U.S. officials, including Robert Gates, subsequently promoted to Defense Secretary, contemplated scenarios in which
Thousands of businesses in many sectors of the economy will declare ‘force majeure’ and break contracts. There will be massive waves of legal suits and a surge in bankruptcies. Layoffs in these vulnerable industries will spread throughout the economy because of traditional economic multiplier effects…. [Policymakers] will try to … reassure financial markets that they will prevent institutions from failing. However, given the severity of the shock, it is unlikely that they will be able to significantly mitigate the pessimism that will permeate the financial markets.
Yet the leaderships’ commitment to business-as-usual severely limits their options: no serious departure from business-as-usual may be contemplated to address the severe threat to business-as-usual which they correctly perceive. The result is such policies as the naked aggression against and occupation of Iraq under fraudulent pretenses, as well as various far-fetched schemes (hydrogen, ethanol, etc.) for “how to drive different,” since within the decade “the hydrocarbon society can’t be with us to the extent it is today” (Bush, April 19, 2005). None of these policies are likely to save Wal-Mart or the travel industry, but at least they can offer Temporary Assistance to Needy Corporations like Archer-Daniels Midland and the defense contractors in the meantime.
The oil companies are also making out like bandits – temporarily, so long as the world economy basically hangs together. But as already indicated, I’m aware of no serious evidence that restricting Iraq’s production was a goal of the 2003 invasion or that in general “the oil major’s primary interest is in suppressing oil production” – Palast’s innuendoes notwithstanding. If that were the case, then why have we experienced 150 years of generally rising production? For example, the reason that Exxon has not met the increased production targets laid out for its shareholders in recent years is evidently that the decline rates in its existing base of production – on the order of 8% per year – are more than a match for the new projects, which have indeed come on line more or less as planned (independent analyst Stuart Staniford). The company is also evidently struggling to replace reserves. In both 2004 and 2005, 94% of Exxon’s claimed hydrocarbon reserve additions came from a single gas field27 – Qatar’s North Field, the co-star of Syriana – before Qatar announced a moratorium on new projects amid concerns that the field might actually be a lot less impressive than had been believed, after Conoco-Phillips drilled a dry hole. (Cf. Greenspan’s comments, above.) As for the related claim which one sometime hears, that the oil companies have an interest in downplaying global reserves (e.g. that they are the main driver of the belief in imminent Peak Oil, as Palast avers) – besides being plain wrong, the fact is that when Shell was forced to downgrade its reserves in 2004, the consequence was a sharp drop in its share price – as well as those of other oil corporations.
I can agree only in part with the idea that the U.S. is attempting “to establish … control over the global oil spigot, and thus over the global economy, for another fifty years” (Giovanni Arrighi, as quoted by Street). What is at stake in the competition between the U.S. and China over the same future energy supplies is not that the U.S. might get relegated to the second-class power status of post-war Britain or France. What is at stake is the very survival of all the industrial and industrializing powers – and their people. This time round, somebody’s oil is going to have to be shut off. Needless to say, this is an extremely dangerous game, threatening everyone’s survival. Doubtlessly, the U.S. wants to use its strong card – military force – to establish control of the global oil spigot, and thereby be in a position to decide whose oil gets shut off first and last. Meanwhile China pursues “long-term energy supply agreements that are in effect treaties,” of the kind which led an Australian Senate report to conclude in 2006 that “It should not be assumed that surplus energy will be available for purchase, even if countries like Australia and the US have the finance.” This situation is also leading to laments about “a defining issue in all aspects of international life” which is resulting in hotel lobbies “filled with Chinese and Indians,” all there with “one objective – to pin down the last acre in Libya” – and which is “sending them into parts of the world where they’ve not been seen before and challenging, I think, for our diplomacy” (Senator Richard Lugar, Condoleezza Rice).28 China is also rapidly building up its navy “because they recognize that we, with the only blue water navy in the world, have the ability, if we wish, to cut off their oil supply” (Congressman Roscoe Bartlett.) Presumably this is China’s second or third line of defense – after their dollar holdings, and perhaps capabilities of destroying U.S. telecommunications. That anything resembling “the global economy” in its contemporary meaning will continue for another fifty years under these circumstances seems highly improbable.
Some qualification is in order here. The two countries, being highly interdependent, and with leaderships fundamentally committed to the status quo within their respective societies, would no doubt wish to avoid or delay such disruptive outcomes as hinted at in the preceding paragraph, so long as this remains possible. The same is true of the zero-sum conflicts between the consuming nations in general, which are also held in check for the time being by real interdependency. The Cheney Task Force report, for example, said that
U.S. energy and economic security are directly linked not only to our domestic and international energy supplies, but to those of our trading partners as well. A significant disruption in world oil supplies could adversely affect our economy and our ability to promote key foreign and economic policy objectives, regardless of the level of U.S. dependence on oil imports.
The concern with world energy supplies is therefore real and significant, as no doubt also is the concern with “our domestic and international energy supplies” – and the relative importance of the two concerns is perhaps suggested by the fact that the report devotes more words to the latter by far. At least there are no grounds for interpreting this passage as implying that direct U.S. access is the lesser of the two concerns. In this connection, it is appropriate to cite Rahul Mahajan, who in his 2003 book Full Spectrum Dominance adopts positions similar to Chomsky’s on the access question, on grounds similar to the ones that have already been discussed. He adds, “Although the war is not about access to oil, the final reason does relate to the amount of oil on the world market. World consumption is growing rapidly, but non-OPEC production has already peaked.” Like so many others, Mahajan asks no questions about whether OPEC alone could, in principle, supply 100 percent (and more, when non-OPEC declines are factored in) of the projected 58 percent increase in global oil consumption by 2020 which he cites. Ordinary physical laws apparently obtain only in the non-OPEC sector of the universe, where geological limits will force “major cuts in consumption (necessary also to halt global warming)” – unless the OPEC starships arrive in time, no doubt equipped with an antidote to global warming as well. Regarding OPEC’s capabilities on the other hand, the world demand for “dramatically higher” OPEC production “could easily be addressed by investment, especially if Gulf states repatriated just a fraction of their massive stores of flight capital.”
While Mahajan arguably overstates the importance of investment to the total picture, he rightly points out that the U.S. has played a substantial role in inhibiting it with regard to Iraq and Iran, in its attempts to isolate regimes that it has considered unacceptable. But unlike Street, he accepts that the U.S. has an interest in expanding global supplies. The principle goal in this connection, Mahajan suggests, is “to maintain control of …[the] process” whereby OPEC expands its capacity, since OPEC would undertake such expansion on its own in any case. But once again, the assumption that OPEC can further increase its production capacity, or that it should be in its real interests to attempt to do so, is highly doubtful, with the largest fields in each country already evidently past peak.
In one of his rare direct comments on Peak Oil, in a radio interview, Chomsky also highlights the perceived need, in the aftermath of a near-term non-OPEC peak, “to sharply increase [Persian Gulf] oil production even to meet current [world] demand, let alone future demand, which is rising,” adding that “my own guess is that if we ever get the secret documents about the planning for the Iraq war, my expectation is that these considerations will have entered significantly.” This interpretation seems reasonable to me as well, as far as it goes.
Be this as it may, the uncritical attitude toward mainstream beliefs about OPEC’s potential may, by itself, go a long way toward explaining why the contemporary “resource wars” issue has often been framed more along the lines of a war for brokerage commissions than as a war for table scraps. In the Chomsky interview just quoted, while the listener’s question was about Peak Oil – i.e. the peak and decline of worldwide production, with its implication of international competition over insufficient supplies of a dwindling critical resource – the issue involved in the way Chomsky frames his response is much less stark: mainly the one between a near-term non-OPEC peak or leveling-off versus OPEC’s potential to continue increasing production for “decades” (together with the important side issue of the effects that “unbounded hydrocarbons” would have on the environment): “As to when you get a peak for OPEC, that’s farther off – decades, but it’s certainly real.”
Returning to the main thread, while evidently neither the U.S. nor China is yet ready to pull the plug on the other, the logic of the situation is that they must be consciously and unconsciously preparing to do so – a major threat to survival in its own right, and underlying even much of the nuclear threat in its present phase. Related to this a comment by Robert Hirsch, author of reports to the U.S. government on the subject of Peak Oil, is apropos:
I wanted to show just one slide that was recently shown by a representative of the Chinese government. They’re projecting peaking of world oil production around 2012. They show a number of options for working the problem including efficiency and prices and taxes and changing city design and a variety of other things. Down at the bottom, they say ‘deprivation and war.’
Finally, it might be suggested on such a basis that access cannot be a real concern, since the outcome for all concerned is so likely to be highly counterproductive – to put it mildly. But by this standard, real resource wars have been rare in history.
In practice, of course, issues of “access” and “control” are ambiguous and interrelated rather than being totally distinct matters. For example, the dependent-client-state relationships that the U.S. and U.K. maintain with the Gulf monarchies, an aspect of control, is also a means by which the profits flow to back to the U.S. and U.K., thereby helping maintain their wherewithal to import oil – i.e. to continue effectively to have access to energy supplies (from whatever mix of suppliers), which of course is a sine qua non for continued profitability of the system as a whole and for continued power projection. To some extent, this must have been true all along. For example, the decision to convert the British navy to oil early in World War I could well have been motivated by a desire to project British military power more efficiently – but it consequently entailed a need to maintain secure access to Middle Eastern supplies, while at the same time the decision served to provide a guaranteed market for the Anglo-Persian Oil Company (later BP), a new economic empire in which the British government maintained 50% ownership in the early years. Or consider the British documents from 1958 which Chomsky has cited in Deterring Democracy (1991) and elsewhere. The principal goals are defined as follows:
(a) to ensure free access for Britain and other Western countries to oil produced in States bordering the Gulf; (b) to ensure continued availability of the oil on favourable terms and for sterling; and to maintain suitable arrangements for the investment of the surplus revenues of Kuwait; (c) to bar the spread of Communism and pseudo-Communism in the area against the brand of Arab nationalism under cover of which the Soviet Government at present prefers to advance.
In other words, access, profits, and control.
More specifically, the concept of “security of supply,” as often found in policy discussions, obviously embodies aspects of both access and control. It also points to an important ambiguity – that between immediate access and future access. The fact that the U.S. and Britain “could probably cut a deal with Iraq tomorrow” (Tony Blair, February 26, 2003) if they wanted Iraq’s oil is indeed true-but-irrelevant, if one has in mind the issue of immediate access.29 But the far more significant sense of “access” – that of future access – is the one indicated by the phrase “security of supply.” As Chas Freeman, Ambassador to Saudi Arabia under Bush the Elder, put it at the time of the Iraq invasion, the Bush Administration “believes you have to control resources in order to have access to them.” Similarly, Fadhil Chalabi, a key figure in pre-war behind-the-scenes consultations regarding the future of Iraq’s oil, recently described the Iraq war as “a strategic move on the part of the United States of America and the UK to have a military presence in the Gulf, in order to secure supplies in the future.” Given the manifest insecurity-of-supply which exists presently, this aspect of control – that is, as a means of ensuring continued access – cannot be dismissed out of hand as mere rhetoric.
But the main point here is not to expound on the full range of U.S. motivations with regard to oil. Rather the point is that the downplaying of the access motive has certainly not been justified. The not-about-access claim is presently maintained on the basis of very little evidence, and despite much counter-evidence. Furthermore, the insistent repetition of this claim is well-designed to divert attention from key facts about the emerging Peak Oil crisis. The facts and logic of the situation indicate that the U.S. and other industrial powers pursuing business-as-usual face huge (probably insurmountable, in that framework) continuity-of-supply problems in the near future. This fact is arguably so central that it ought to be preeminent in any presentation of the facts, even if the public also needs to be talked out of any idea that they, or the powers-that-be, have a right to such access, and regardless of ultimate judgments regarding the extent to which this real access problem has figured in policy formation. It must not be forgotten that industrial civilization as it has evolved actually does depend on a continuous supply of oil – which in the long run cannot be continued.
The consequences of the predicament of “overwhelming dependence on an exhaustible resource” (William Catton) are likely to be extremely detrimental for all the world’s people, unless unprecedented levels of cooperation can be achieved. I think Richard Heinberg was hardly exaggerating when he recently wrote:
The only way to avert massive social chaos and famine as extraction levels decline will be to devote public capital domestically toward the building of low energy infrastructure (e.g. electrified rail networks, trolley lines, wind farms) while moving many people to rural areas and teaching them to farm sustainably. Production and consumption will have to be largely re-localized, essential goods rationed by quota. Basically the same thing will have to happen in the poor nations.
But these (comparatively) hopeful prospects have little chance of realization so long as many of those with long and admirable records promoting public understanding of critical human issues relegate the defining issue of our time to a side concern, hardly worth taking the time to learn about themselves. As a start, the not-about-access claim must be rethought.
Notes
1.A notable exception to the prevailing complacency on the Left (and, of course, not only there) toward the details of the unfolding energy predicament is provided by John Bellamy Foster’s “Peak Oil and Energy Imperialism,” Monthly Review, July-August 2008. With a somewhat different design and emphasis, it provides a most useful complement to the present analysis (link).
2. The somewhat notorious 1975 congressional study, “Oil Fields as Military Objectives: A Feasibility Study” was already cognizant of the fact that a number of major suppliers of refined petroleum products to the U.S. were themselves dependent on OPEC crude, hence unreliable in the face of a potential OPEC embargo: “Neither Canada nor friendly Caribbean states (now major U.S. suppliers) could help take up the slack, even if they wanted to. 5 OPEC provides almost half of Canada’s petroleum. Refineries in Trinidad and Tobago, the Bahamas, and Netherlands Antilles also depend on OPEC oil. Crude oil sources would dry up if any of those parties transshipped to the United States during an embargo.”
3.See details further on.
4. On Cantarell, see David Luhnow, “Mexico’s oil output may decline sharply: Pemex Study Points to Possible Drop At Major Field, Which Would Strain Global Supply,” Dow Jones Newswire, February 9, 2006 (link); David Luhnow, “Mexico’s oil output cools,” Dow Jones Newswire January 29, 2007 ( link); David Luhnow, “Mexico tries to save big, fading field,” Dow Jones Newswire, April 5, 2007 (link); One of the earliest and still most revealing sources, in Spanish, is Crisis Energetica, “Entrevista con un geologo de PEMEX,” November 13, 2005 (link); Also in Spanish, some of David Shields’ investigations are reproduced here and here. As of May 2008, Bloomberg reports that Cantarell’s output was down 34% from a year earlier (link).
5. See Roger Blanchard’s The Future of Global Oil Production: Facts, Figures, Trends and Projections, by Region, (McFarland, 2005) for general background on the state of various countries’ oil production.
6. For example, Dick Cheney (1991, as quoted by Street): “We’re there because the fact of the matter is that part of the world controls the world supply of oil, and whoever controls the supply of oil, especially if it were a man like Saddam Hussein, with a large army and sophisticated weapons, would have a stranglehold on the American economy— indeed on the world economy.” See also: “Cheney Rebukes Putin on Energy Blackmail,” Financial Times, May 4, 2006. The key sentence, frequently referred to by Chomsky: “Dick Cheney, the US vice-president, delivered a stinging criticism of Russian President Vladimir Putin’s rule, warning the Kremlin against using gas and oil supplies as ‘tools of intimidation and blackmail’….” Similarly Condoleezza Rice told the Senate Foreign Relations Committee that “the politics of energy….has given extraordinary power to some states that are using that power in not very good ways for the international system – states that would otherwise have very little power.” See U.S. Senate Foreign Relations Committee, hearing on U.S.-India Atomic Energy Cooperation, April 5, 2006 (link). (Click on title for video of the full hearing.)
7. Additional quotations, sources, and further discussion, may be found in my compilation “Who’s Talking About the Peaking of World Oil Production – And What They’re Saying,” Global Public Media, November 18, 2007 (link) and in my chronology of Bush Administration energy concerns on The OilDrum’s Drumbeat for November 9, 2007 (link).
8. Elsewhere, the available record instances explicit conjunction of the two policy focii: In 2004, the New Yorker reported on a top-secret document it had obtained, dated February 3, 2001, and “written by a high-level N.S.C. official”: “It directed the N.S.C. staff to coöperate fully with the Energy Task Force as it considered the ‘melding’ of two seemingly unrelated areas of policy: ‘the review of operational policies towards rogue states,’ such as Iraq, and ‘actions regarding the capture of new and existing oil and gas fields.'” See Jane Mayer, “Contract Sport,” New Yorker, February 16, 2004 (link).
9. See e.g. Chomsky, Hegemony and Survival, (Metropolitan, 2003), p. 162.
10. See Defense Science Board Task Force on Improving Efficiency of Weapons Platforms, More Capable Warfighting Through Reduced Fuel Burden, January 2001; Baker Institute/Council on Foreign Relations Independent Task Force, Strategic Energy Policy: Challenges for the 21st Century, April 2001; National Energy Policy Development Group, National Energy Policy: Report of the National Energy Policy Development Group, May 2001
11. Simmons describes himself as non-partisan on energy issues, though his personal political persuasion is Republican. He was never a participant in Bush Administration deliberations, though he was evidently well-respected by them as source of information. See e.g. link here. By heightening Administration concern over energy adequacy, he could arguably have played an indirect and inadvertent role in the chain of events that led to the invasion of Iraq. On the other hand, I consider his efforts over the past few years to inform anyone who will listen of the seriousness of the situation to be entirely admirable. The words he used to describe the motives of the group of scientists who have been active in raising awareness of Peak Oil, could well be applied to himself: “These people – none of them have an axe to grind. They’re basically all futurists, really worried about the sustainability of society. And I gather that’s really where Dr. Hubbert was coming from.” See Hubbert tribute audio compilation.
12. Cited in Richard Heinberg, The Party’s Over, (New Society, 2003), p. 100.
13. See sources cited in notes 1 and 7, above.
14. As shown in the March 2003 BBC Documentary The War for Oil (link).
15. Ibid.
16. See e.g. Kjell Aleklett, “International Energy Agency Accepts Peak Oil” (link), which includes a quotation giving the IEA’s account of these matters as well as other details from ASPO publications. See also International Energy Agency, World Energy Outlook 2004, pp. 91-92 (link).
17. See Matthew Simmons, Twilight in the Desert, (Wiley, 2005), pp. 24, 298-99. As a rule, reporting which cites “lack of investment” as the sole cause of failures to increase “capacity,” makes no mention of the major investments which have occurred, such as Iran’s construction of an “enormous” pipeline (Simmons) to bring South Pars gas to Agha Jari, where it is supposed to prop up the production of that dying supergiant oilfield, or Mexico’s construction of the world’s largest atmospheric nitrogen separation plant – which temporarily boosted Cantarell’s production at the expense of the rapid declines now underway, and at the expense of a huge debt burden.
18. Bill Spindle, “Crude Reality: Soaring Energy Use Puts Oil Squeeze on Iran,” Wall Street Journal, February 20, 2007, A1, A14.
19. Much the same information on decline rates in Saudi Aramco’s mature fields had been provided to the New York Times in a written company statement. See Jeff Gerth, “Forecast of Rising Oil Demand Challenges Tired Saudi Fields,” New York Times, February 24, 2004 (link).
20. The Future of Saudi Arabian Oil Production: A Staff Report to the Subcommittee on International Economic Policy of the Committee on Foreign Relations, United States Senate, Washington, D.C., April 1979, pp. 29-30. See Simmons’ book for further discussion, pp. 377-389.
21. Saudi Aramco CEO Abdallah S. Jum’ah: “Saudi Aramco’s proven oil reserves currently total 260 billion barrels. That’s with a B. They are contained in 85 fields and are spread across over 320 different reservoirs. To date only 23 of these fields have been developed and even these fields still contain roughly half of our current reserves. The other half of course is contained in undeveloped fields and there are 62 of them” (link to pdf, 2004, about half way down the transcript). My count (excluding Neutral Zone and natural gas fields): (1) Dammam, Saudi’s first field; (2-7) the six major fields – Ghawar, Abqaiq, Berri, Safaniyah, Marjan and Zuluf; (8-18) eleven sporadically-producing fields which are the focus of recent or planned redevelopment projects: Manifa; the pair Qatif and Abu Sa’fah; the triad Khursaniyah, Abu Hadriyah and Fadlili; Khurais and three satellites – Mazalij, Abu Jifan, Qirdi; Harmaliyah, and (19-24) six fields developed post-nationalization: Hawtah and four satellites (3 beginning in 1994, 1 in 1997, as cited by Simmons, p.224; not sure the names), and Shaybah. Thus we arrive at a total of 24 fields. However “Joules Burn,” writing on The Oil Drum, reports a recent map which indicates that “A fourth field often included as one of the satellites of the Khurais complex, Qirdi, has apparently become the southern tip of Khurais.” This brings us to back to Jum’ah’s figure of 23. As for the separate goal of producing from diversified rock strata, that also seems to have fallen very short, according to Simmons and other sources.
22. Other well-productivity estimates: ASPO Newsletter 39, March 2004 (link); Global Policy Forum, “Number of Wells Producing Oil and Average Barrels Per Well, Daily in 1979,” 2003 (link). Thanks to discussants at The Oil Drum for bringing these to my attention: see “Drumbeat” for March 4, 2007 (link).
23. Indeed, as Chomsky has recently pointed out, this preference has become blatantly transparent. A November 2007 “Declaration of Principles” signed by Bush and Iraqi’s Prime Minister, Nouri al-Maliki, commits Iraq to facilitating “the flow of foreign investments to Iraq” – meaning those connected with the extraction of Iraq’s oil resources – “especially American investments.” Arguably, the preference in itself is consistent with any of the three main “oil” motives: profits, control, or access.
24. Chip Cummins, “Choke Points: As Threats to Oil Supply Grow, A General Says U.S. Isn’t Ready,” Wall Street Journal, December 19, 2006, A1, A14.
25. One source of enlightening discussion of global gas reserves is contained in a series of posts at InvestorVillage CWEI, in which a self-described “subsurface professional” with access to the IHS Energy database reviews the contents of that database regarding the world’s top 50 gas fields outside North America by claimed reserve volume. See messages # 74013 and 74021. The same writer had earlier discussed the IHS field-by-field data on individual OPEC countries in a series of thirteen posts, which were then summarized in message #56151, along with his revised estimates for proved + probable reserves for each country. I have not yet located his similar posts regarding Russian oil reserves, alluded to in message # 71577. Site link.
26. As cited in Richard Heinberg, Powerdown, (New Society 2004), p. 17.
27. Steven Levine and Jeffrey Ball, “Exxon Bolsters its Reserves,” Wall Street Journal online, February 15, 2006. Source article reproduced here, near the bottom of the page. The same article appeared in the print version of the newspaper under the headline “Exxon’s reliance on Qatar field raises concerns.”
28. See link to Senate hearing, Op. cit. n.6.
