Fuel Emergency Part 1
Preparing for a liquid fuels emergency does not appear to be on the radar screens of most government officials and emergency planners. This is a very worrying situation in light of emerging energy supply realities (accelerating oil-field depletion rates, plummeting exploration and development, rusting infrastructure, and a greying workforce). All of these factors put together mean there is an increasing potential for fuel supply emergencies in the years ahead.
I will address fuel emergencies in several parts. This part will deal with the threat itself and the next one will analyze government plans to administer a major fuel emergency.
Some of the most progressive research on peak oil has come from military/security analysts, but even they have not examined the perils of a major domestic fuel emergency and how one might be administered.
The seminal study on the fuel emergency topic is the first Oil Shockwave study done in June 05. (There have been a few lower-level Shockwave exercises on university campuses, etc and SAFE conducted a second one in Washington in Nov. 07, but the original exercise and its conclusions remain the most interesting in my opinion).
This top-level role-play addressed a fictitious scenario in which about 4% of global supply was removed over a 6-month period due to a combination of weather and terrorist activity.
The conclusions were striking:
- the removal of 4% of global production resulted in a near-tripling of oil prices (prompting Shockwave participant Robert Gates to state, "The real lesson here is that it only requires a relatively small amount of oil to be taken out of the system to have huge economic and security implications").
- the US had very few effective short-term remedies to deal with the crisis.
Robert Rubin summarized the gravity of the situation: "The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government."
Here is the link to the Oil Shockwave report:
As Shockwave organizer Robbie Diamond indicated in his subsequent House testimony, the planners of this exercise "believed that being profoundly realistic and having unimpeachable credibility was imperative.... It was our determination to put together a set of circumstances and events that were dramatic, but were neither shocking nor unexpected."
Here is the link to Diamond's testimony:
Robert Gates pointed out that "the scenarios portrayed were absolutely not alarmist; they're realistic."
This is correct: Shockwave considered a set of events which were far from worst-case.
There are only two facilities in the world which handle more than 3 mbpd, both in Saudi Arabia.
- Roughly half of Saudi oil is funneled through its massive facility at Abqaiq, and a similar amount is exported from its port at Ras Tanura.
- Abqaiq was left out of the Shockwave scenario entirely, while Ras Tanura suffered a (fictitious) attack which was unsuccessful and had no effect other than to spook the market.
- Jim Woolsey was quite correct when he said that the Shockwave scenario was "relatively mild compared to what is possible."
In the real world, we have bin Laden's Oct 04 videotape in which he indicated that oil facilities which serve Western interests would henceforth be preferred targets.
- In Dec 05 there was a 12-page presentation of preferred oil targets posted on an Al Qaeda-affiliated internet forum.
- In Feb 06 we had the first land assault on Abqaiq which was repelled.
- April 07 saw the arrest of 172 militants who were at the "zero-hour" of flying planes into Saudi oil facilities.
- In Nov 07 there was the arrest of 208 militants who had planned "an imminent attack on an oil installation."
- In March 08 there was the arrest of 28 militants who were also plotting to attack oil facilities.
Fears of a major oil shock are not unfounded when we have determined men who are actively trying to make it happen.
One of these times Al Qaeda is bound to get lucky and within hours the entire world could be forced into an unprecedented phase of very high oil prices, low availability of exports, catastrophic economic damage and serious domestic social unrest.
So far we have had only a hint of what such a world would be like, since events like the UK-2000 and post-Katrina fuel shortages were relatively brief and somewhat localized.
The destruction of one or more of the truly major oil facilities would surely push our oil-dependent continent into an unprecedented state of emergency.
As the British discovered during their ten days in Sept. 2000, a fuel emergency quickly becomes a food emergency as well.
Here in Canada (as in most countries) much of our food is imported, so a major fuel crisis could bring our globalized food system to a grinding halt.
Should a fuel emergency occur in the early winter, many Canadians would have trouble staying warm as well as fed.
For citizens in remote communities these problems would surely be extreme.
Meanwhile, there seems to be very little public awareness of our collective vulnerability.
The Australians seem to be the most proactive on this, and their detailed fuel emergency plan stresses the need to advise the public to undertake personal and agency contingency planning, that government intends to allow "full pass-through" of emergency pricing, and that very few citizens will qualify as "essential users" should rationing be required.
We will begin to examine the IEA plan for fuel emergencies in the next installment.