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Geopolitical Feedback Loops in Peak Oil
Jeff Vail, The Oil Drum
It is quite common to hear experts explain that the current tight oil markets are due to “above-ground factors,” and not a result of a global peaking in oil production. In reality, geological peaking is driving the geopolitical events that constitute the most significant “above-ground factors” such as the chaos in Iraq and Nigeria, the nationalization in Venezuela and Bolivia, etc. Geological peaking spawns positive feedback loops within the geopolitical system. Critically, these loops are not separable from the geological events-they are part of the broader “system” of Peak Oil.
Existing peaking models are based on the logistic curves demonstrated by past peaking in individual fields or oil producing regions. Global peaking is an entirely different phenomenon-the geology behind the logistic curves is the same, but global peaking will create far greater geopolitical side-effects, even in regions with stable or rising oil production. As a result, these geopolitical side-effects of peaking global production will accelerate the rate of production decline, as well as increase the impact of that production decline by simultaneously increasing marginal demand pressures. The result: the right side of the global oil production curve will not look like the left…whatever logistic curve is fit to the left side of the curve (where historical production increased), actual declines in the future will be sharper than that curve would predict.
Here are five geopolitical processes, each a positive-feedback loop, and each an accelerant of declining oil production…
(3 October 2007)
The E.P.R. Targets Mexico’s Energy Industry
W. Alejandro Sanchez, Power and Interest News Report (PINR)
The Ejército Popular Revolucionario (Popular Revolutionary Army, E.P.R.) has made its presence felt across Mexico in recent months, particularly in the wake of the recent September 10 attacks on a number of oil and gas pipelines in Mexico’s southern states of Veracruz and Tlaxcala. This has created yet another security-related problem for President Felipe Calderon.
Not much is known about the E.P.R., but what is known of the organization, its origins and past operations suggest that it is a group whose capabilities should not be underestimated. The rebel group emerged in Guerrero State in June 1996 during a ceremony that marked the first anniversary of the “Massacre of Aguas Blancas,” namely the murder of 17 peasants carried out by members of the state judicial police.
According to a report by the Latin American TV station Univision, the E.P.R. was created through the union of 14 armed guerrilla movements…
…The international media, in general, has played down the September attacks themselves, instead focusing on the attack’s repercussions on Mexican oil and gas exports and how the explosions affected the country’s economy and industries.
…It is important not to underestimate the E.P.R.’s attacks, even though the group’s activities so far have proven somewhat sporadic. Certainly, the E.P.R. has proven to be resourceful and enduring.
While the E.P.R. does not pose a direct threat to the Mexican government, they do have the capacity to inflict serious damage on the country’s infrastructure and economy. It is likely that it is only a matter of time before the E.P.R. strikes again, showing that the Calderon administration has one more domestic security threat with which to deal.
(2 October 2007)
Japan Finding It Hard to Tap Africa for Oil, Gas
Mari Iwata, Dow Jones Newswires via Rigzone
Japan’s government has sent delegations to African countries such as Angola and Madagascar in search of opportunities for exploration, development and production of oil and natural gas as part of efforts to increase its energy stakes while diversifying its sources of energy supplies.
But getting into the upstream businesses there seems mostly difficult due to intensifying competition with other countries, especially China, said a senior official at Japan’s Ministry of Economy, Trade and Industry.
“I went to Angola in early September to gauge possibilities of getting into the upstream businesses,” said Shin Hosaka, director of the petroleum and natural gas division for the Agency for Natural Resources and Energy, a unit of METI.
But “it seems hard to make room for us, as there are a lot of people coming from across the world…and Angola has set high conditions,” Hosaka added.
(4 October 2007)
China and the Competition for Energy Resources
World Affairs Council
China is the second-greatest energy consumer in the world (behind the United States), accounting for about 10.8 percent of annual global energy consumption. As China pushes its economic development forward, its energy demand has greatly increased, and is expected to continue growing at about 5% each year through the year 2020.
Dr. Robert Ebel, Dr. David Finkelstein, and Ambassador Chas. Freeman will explore how China’s quest for energy resources has had an impact on the developing world, and how its competition for these resources is affecting its relationship with other countries. What are the implications of China’s quest for energy security? What are possible openings for international cooperation? – World Affairs Council of Washington D.C.
(11 September 2007)
Russian oil industry: Foreign, domestic interests
Julia Kusznir and Heiko Pleines, Energy Publisher
At present the Russian leadership is aiming to increase state control over oil production and to focus on the development of the domestic market. This strategy may hamper efficiency.
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As the world’s second biggest oil producer, Russia has profited hugely from high world market prices for oil.
In contrast to the gas industry, the Russian oil industry was privatized in the 1990s and the domestic market for oil and oil products was liberalized. Foreign investors were allowed to play an important role in the development of the industry.
However, at present the Russian leadership is aiming to increase state control over oil production and to focus on the development of the domestic market. This strategy may hamper efficiency.
Though Russia holds only 7 percent of worldwide proven oil reserves, the country has in recent years been the world’s second largest oil producer, ranking between Saudi Arabia and the USA. Russia’s oil production is likely to rise until the end of this decade. However, for the following decade many forecasts are pessimistic. They see four main risks to production growth.
(2 October 2007)
Energy Publisher has some interesting material on its website. Unfortunately, there is no “About Us” page, so it’s hard to tell who is behind the site and what their slant is. -BA
Kenya: Oil Prices – Country And Africa Are in for a Crude Awakening
Isaiah Oduor-Ouma, The Nation (Nairobi, Kenya) via allAfrica
IT’S DIFFICULT FOR ME TO MEET President Kibaki. It’s also hard to meet his political rivals Raila Odinga and Kalonzo Musyoka. Since one of these men will occupy State House come January, I will tell them about a man who taught Economics at the University of Nairobi in the mid-1980s.
“Assume a world in which there are only two products, food and clothes.” And as he spoke, he would draw a left vertical line to represent food, and a bottom horizontal one for clothes. In between, he would sketch a slope, which he called “demand curve” to illustrate how people demand more clothes at the expense of food, and vice versa.
“Be sure,” he would implore sagely, “that the demand curve touches neither the vertical nor the horizontal axes. It touches the vertical axis, you have a well-fed nude; the horizontal, you have a well-dressed corpse.”
THEREFORE, WHEN I READ ABOUT the latest surge in oil prices, all those demand curves started racing through my head, this time with regard to our national policy on petroleum.
Nobel laureate Wangari Maathai, speaking at the 11th Africa Gas and Oil Conference in May, said: “As poor countries joined the race for economic development, the demand for petroleum rose. So did the import prices.”
Petroleum already accounts for 22 per cent of Kenya’s imports. The path Kenya has taken is an old one, having been trodden before by countries like the US. Yet, whereas the US has vast oil deposits of its own, Kenya has no known reserves.
…Kenya’s dilemma is what it will do when the strongest nations start grabbing all the oil. It should assume a world of just two products – oil and blood – where more blood will be spilt for the sake of oil.
We need to plan our energy security by developing alternative sources, otherwise the demand curve will touch the blood axis. Over to you, our beloved presidential candidates!
(3 October 2007)
