Centerblue.org

So this is is what our oil addiction has come down to–the leader of the free world figuratively getting on his knees and begging for more oil from OPEC and the Saudis.

Said Bush:

“When [US] consumers have less purchasing power, it could cause the economy to slow down. I hope OPEC nations put more supply on the market. It would be helpful.”

How utterly embarrassing. It underscores American helplessness in its addiction to these foreign powers that are taking the humongous sums of money we’re sending to them for oil or debt to turn around and buy pieces of our own banks to save them from the mortgage crisis. Yep–we’re paying other countries to come over here and buy pieces of our own country so as to feed our debt and oil addictions.

It’s like the prince with land but no money who insists on partying by selling pieces of his land to continue his habit, until he eventually ends up being nothing but a renter on his own property.

The Saudis are playing their own little game too. Their response to Bush’s bleating was:

“Our interest is to keep oil supplies matching demand with minimum volatility in the oil market,” Oil Minister Ali Naimi told reporters. “We will raise production when the market justifies it. This is our policy.”

Sorry for the stupid question–but what more justification than historically high $100+/barrel prices is needed to convince the Saudis the market justifies it? Why are they leaving extreme wealth on the table when they could generate insane amounts of money by pumping more oil?

Hmmm…maybe it’s because they can’t.

Threatened by exploration of alternative energy sources in the wake of high fuel prices and the increasing consensus that global oil production may be getting ready to peak, Saudi Arabia, Exxon Mobil and other oil industry players are going on the offensive (subscription required.)

At an OPEC seminar yesterday, Saudi oil company Aramco’s CEO claimed that there is plenty of oil left to guzzle, and that we have only gone through 18% (1 trillion barrels) of the world’s total supply of 5.7 trillion barrels. The remaining 4.7 trillion should be enough to supply the Earth with oil for more than 140 years at current consumption rates, he said.

There are a lot of problems with Aramco’s assertions:

• If ARAMCO is so confident that it still has so much oil to provide, why won’t Saudi Arabia allow independent geologists to assess the true amount of reserves in the ground? In his book, “Twilight in the Desert,” oil insider Matt Simmons lays out a compelling case for why he believes that Saudi oil claims are preposterous and politically motivated. The fact that Saudi Arabia has been unable to increase its oil production in the last two years (and has in fact suffered a decline this year over last) really makes one wonder what’s going on. What Saudi Arabia says doesn’t match what it is doing, and it is extremely dangerous for the world to rely on its bold assertion of huge oil reserves remaining based on faith alone.
• 3.5 trillion out of the 4.7 trillion supposedly left: a) depend on assertions of “as yet undiscovered” oil fields (which by definition can’t be measured; b) depend on greater extraction from new and existing oil fields based on as-yet unavailable new technology that may or may not happen; and c) factor in 1.5 trillion from unconventional and difficult-to-produce sources like Canada’s tar sands. The first two conditions speak for themselves as for how foolish we are to depend on them. As for the last, it takes large amounts of energy and time to extract oil from unconventional sources, such that it is unreasonable to expect that they would substitute for the cheap, readily available oil we have today.
• The 140-year assumption is made based on existing production and demand levels, but the world will not stand still for 140 years. Demand continues to increase, especially with India and China guzzling ever more oil every year. There’s also the issue of practical limits to oil production given available technology, which many analysts peg at about 100 million barrels a day–a level that could be reached as soon as 2015.

Concerned about the possibility of peak oil (the theory that oil production will plateau and then begin an irreversible decline), the Department of Energy has asked the National Petroleum Council to conduct a study to investigate peak-oil claims. NPC turned around and appointed none other than Lee Raymond, retired Exxon CEO, as the study’s chairman.

Isn’t that kind of like putting the fox in charge of the henhouse? Here’s what he had to say about his “unbiased” position on the issue in the WSJ article:

“I think there’s a lot of misconceptions of what peak oil is,” Mr. Raymond, who is leading the U.S. oil study, said in an interview last week. “The resource base is continually changing, driven by economics and technology.” But he said his views won’t dictate the study’s results. “I may learn something.”

I’m not getting warm fuzzies about Raymond’s ability to look at the issue fairly. He, like Saudi Arabia, insists that technology will save the day by making existing oil wells more productive and allowing discovery of new fields. Unfortunately, 36 years’ worth of technology has done nothing to slow the US’s inexorable slide in oil production since its peak in 1970–despite the large find in Prudhoe Bay. Why should we believe “new technology” will help us now?

When we live in a world where new oil finds rely on five-mile-deep wells in ocean water and where nations’ stated oil reserves are nothing but a political game with no independent verification, we are taking a big risk of a huge shock to our energy infrastructure should these claims dissolve under the harsh light of reality.

These countries and oil companies have a strongly vested interest in letting the world believe there’s plenty of petroleum left. We shouldn’t take their word for it.

In the wake of ever-rising petroleum prices, people are casting about for explanations and wondering what the future holds. While some say we can just increase production, the truth is that more and more of the remaining reserves of oil are in places where it is increasingly expensive to extract–such as the deep ocean or in countries that have suddenly discovered the use of oil as a political weapon.

Additionally, a new idea is gaining traction in mainstream consciousness: the concept of “peak oil.” Peak oil, roughly defined, is the idea that worldwide oil production will increase only up to the point at which we have extracted half of the Earth’s oil reserves. After that point arrives, production will begin to decline at an increasingly sharp rate despite our best efforts to maintain it, with potentially very serious consequences for a population with an ever-growing thirst for oil. The theory was first developed by Shell geologist Marion King Hubbert for predicting peak US oil production. It was later expanded to include world production as explained by Kenneth Deffeyes’ book, “Beyond Oil: The View From Hubbert’s Peak.” Other publications have fueled the fire and have essentially validated the theory, including Matthew Simmons’ “Twlight in the Desert: The Coming Saudi Oil Shock And The World Economy;” The Department of Energy’s Hirsch Report urging the US to begin now in moving to alternative fuels to minimize the economic shocks of peak oil; and even the US Army Corps of Engineers’ report titled “Energy Trends And Implications for U.S. Army Installations.”

The big problems are that nobody can quite agree on when peak oil will occur, or on just how serious consequences will be when it does. Some experts like Deffeyes believe peak oil already occurred in late 2005, which they believe explains the current extreme oil price volatility and which makes it very late for beginning mitigation strategies. Other experts estimate its occurrence five, ten, twenty or more years in the future.

On the issue of consequences, the Hirsch Report and websites like Life After The Oil Crash (LATOC) and dieoff.org ring some very serious alarm bells. Republican Congressman Roscoe Bartlett has given presentations to Congress and others on peak oil, and has used information from the LATOC site. The websites essentially predict the collapse of modern civilization as it is quickly and increasingly cut off from its most precious resource, given that everything in our civilization from food growth and transport to plastics rely on petroleum. They believe we are already too late to save ourselves by switching to alternative energy sources that would in any event be inadequate to replace oil.

I’ve often wondered whether so-called peak oil “alarmists” were being overly pessimistic. The pessimism seems especially obvious in light of how amazingly quickly we are moving closer to an ethanol infrastructure as a result of higher oil prices. Other rays of hope are out there too, such as companies moving entirely to wind-powered energy.

The Peak Oil Debunked blog has published an excellent counter-argument to the peak oil pessimists that is well worth a read. While not denying the inevitability of peak oil, the main arguments are essentially that a) using less energy than we do now would not be catastrophic, given the huge amount of waste currently built into the system; b) we use oil for so much now only because its cheap and convenient, and when that is no longer true we will re-prioritize our energy use and make do with alternatives; c) the energy used to switch to alternative energy can be in the alternative of what we would use energy for, instead of on top of it (for example, we could build an electric train instead of a fuel-guzzling airport rather than creating both); and d) we need not find a single alternative to oil when multiple technologies together can fill the void.

The article is a great read, and I always appreciate challenges to established dogma.