The End of the World as You Know It
…and the Rise of the New Energy World Order
–by Michael Klare [in TomDispatch]
You know the old cliche–you can ignore this book at your peril? Well, in this case it’s true. You just can’t afford to ignore this book–it’s the planet’s peril that’s in question, yours, mine, and everyone’s. If you heard Michael Klare interviewed by Terry Gross yesterday, you know that this isn’t just Casandra-talk; Klare’s analysis is grounded in painstaking research and bolstered by a fine dialectical mind that illuminates the linkages: he’s talking about the militarization of energy relationships, the connection between oil and recession, the incipient decline of American empire, the implications for global warming….
Tomorrow night, after he paints what has to be a gloomy picture, we’re going to talk to him about what we can do, what kind of actions can progressive activists take so we’re not just overwhelmed by these developments. Nobody, including Michael, wants us to just walk away even further depressed. Come join the dialogue!
The combination of rising demand, the emergence of powerful new energy consumers, and the contraction of the global energy supply is demolishing the energy-abundant world we are familiar with and creating in its place a new world order. Think of it as: rising powers/shrinking planet.
This new world order will be characterized by fierce international competition for dwindling stocks of oil, natural gas, coal, and uranium, as well as by a tidal shift in power and wealth from energy-deficit states like China, Japan, and the United States to energy-surplus states like Russia, Saudi Arabia, and Venezuela. In the process, the lives of everyone will be affected in one way or another — with poor and middle-class consumers in the energy-deficit states experiencing the harshest effects. That’s most of us and our children, in case you hadn’t quite taken it in.
Here, in a nutshell, are five key forces in this new world order which will change our planet:
1. Intense competition between older and newer economic powers for available supplies of energy.
2. The insufficiency of primary energy supplies.
3. The painfully slow development of energy alternatives.
4. A steady migration of power and wealth from energy-deficit to energy-surplus nations.
5. A Growing Risk of Conflict.
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April 17th, 2008 @ 9:13 am
“An increase of this sort would not be a matter of deep anxiety if the world’s primary energy suppliers were capable of producing the needed additional fuels. Instead, we face a frightening reality: a marked slowdown in the expansion of global energy supplies just as demand rises precipitously. These supplies are not exactly disappearing — though that will occur sooner or later — but they are not growing fast enough to satisfy soaring global demand.”
In fact Klare offers no evidence that suppliers are incapable. Certainly at the present, supply is gaining on demand. This article is more alarmist disinformation.
“The combination of rising demand, the emergence of powerful new energy consumers, and the contraction of the global energy supply is demolishing the energy-abundant world we are familiar with and creating in its place a new world order…This new world order will be characterized by fierce international competition for dwindling stocks ”
More xenophobic fearmongering. Supply is clearly not contracting. Yet more lies.
“These rising economic dynamos will have to compete with the mature economic powers for access to remaining untapped reserves of exportable energy — in many cases, bought up long ago by the private energy firms of the mature powers like Exxon Mobil, Chevron, BP, Total of France, and Royal Dutch Shell.”
Yes, “many cases” 3% of proven reserves to be exact.
“Several of these state-owned firms, including CNPC and India’s Oil and Natural Gas Corporation, are now set to collaborate with Petróleos de Venezuela S.A. in developing the extra-heavy crude of the Orinoco belt once controlled by Chevron. In this new stage of energy competition, the advantages long enjoyed by Western energy majors has been eroded by vigorous, state-backed upstarts from the developing world.”
More xenophobic claptrap. Western big oil has for decades relied on fees, markups and “spreads” for it’s earnings. They are happy to generate income from transport, refining and retailing. Expansion of supply only reduces their margins. They are happy to let others make these risky development investments. When supply eventually exceeds demand they can pick up these assets for pennies on the dollar from upstarts that depend on higher prices. Oil like any commodity IS cyclical. The history of the industry contains six similar cycles.
By all accounts,[???] the global supply of oil will expand for perhaps another half-decade before reaching a peak and beginning to decline.”
This is nothing more than the gospel according to Klare.
“Most [any evidence???] energy professionals, however, consider this estimate highly unrealistic. “One hundred million barrels [for 2030] is now in my view an optimistic case”
First he claims that production will peak shortly from the current 85 million barrels, then he claims that one estimation of 100 million barrels in 2030 supports his contention. His readers are required to have an awfully short attention span, though I guess he could be relying on their ignorance of current levels.
“major energy firms…drill in the deep and difficult waters of the Gulf of Mexico and the Atlantic Ocean. The result? A few more barrels of oil or cubic feet of natural gas at exorbitant prices”
Actually the production cost of deep water oil is under $25/barrel hardly “exorbitant”. “A few more barrels” is Klare’s terminology for hundreds of billions of barrels.
“Will energy-deficit states launch campaigns to wrest the oil and gas reserves of surplus states from their control — the Bush administration’s war in Iraq might already be thought of as one such attempt — or to eliminate competitors among their deficit-state rivals?
The high costs and risks of modern warfare are well known and there is a widespread perception that energy problems can best be solved through economic means, not military ones. Nevertheless, the major powers are employing military means in their efforts to gain advantage in the global struggle for energy, and no one should be deluded on the subject.”
Here it is Klare who is attempting to “delude” his readers by pretending that the wars in the Middle East are for “control of oil” not wars for greater Israel.
“What this adds up to is simple and sobering: the end of the world as you’ve known it.”
Klare uses the words “dire” and “catastrophe” in almost every paragraph throughout the article and finally closes with a baseless Malthusian prognosis.
April 17th, 2008 @ 3:16 pm
atheo, you get one chance at this. Next time you post, include sources and link to your claims and leave out the “lies,” “claptrap,” and “alarmist disinformation.” Klare has done a lot of homework. The sources in his book run to 60 pages. If you want to argue, fine, but put your cards on the table, cite sources and data. Otherwise it’s a useless spew and not worth having you at the table.
April 17th, 2008 @ 5:06 pm
Table 3: The “O-15″: Top Sources of Growth in Net Production Capacity to 2015
(million barrels per day)
Saudi Arabia *
12.7—–2005
14.3—– 2015
1.6————change 2005-2015
Russia
9.6—–2005
11.5—– 2015
1.9————change 2005-2015
Iran
4.3—-2005
5.7—– 2015
1.4——–change 2005-2015
Iraq
2.6—–2005
5.5——2015
2.9—– ——–change 2005-2015
Canada
3.5—-2005
5.3—– 2015
1.8——–change 2005-2015
Venezuela
3.0—-2005
4.5—– 2015
1.5——-change 2005-2015
UAE
3.1—-2005
3.9—– 2015
0.8———–change 2005-2015
Kuwait *
2.9—-2005
3.7—– 2015
0.8———change 2005-2015
Nigeria
2.9—-2005
3.6—– 2015
0.7———-change 2005-2015
Kazakhstan
1.2—-2005
3.1—– 2015
1.9———change 2005-2015
Algeria
2.3—–2005
2.9—– 2015
0.6———–change 2005-2015
Libya
2.0—–2005
2.8—– 2015
0.8——–change 2005-2015
Brazil
1.8—-2005
2.6—– 2015
0.8———change 2005-2015
Angola
1.2—-2005
2.3—– 2015
1.1———change 2005-2015
Azerbaijan
0.5—-2005
1.0—– 2015
0.5———change 2005-2015
O-15 totals
53.6—-2005
72.7—– 2015
19.1———-change 2005-2015
Share of World Liquid Capacity
61%
69%
*Includes 50 percent of the Neutral Zone.
Source: Cambridge Energy Research Associates.
March 2007
http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2
———————————————–
New techniques revitalize old oil wells
BAKERSFIELD, Calif., March 5 Old oil fields in California and elsewhere are the petroleum industry’s version of the fountain of youth thanks to new extraction technology.
The Kern River field at Bakersfield, Calif., has produced oil for 108 years and now kicks out 8 1/2 times the oil it did in the 1960s thanks to high-pressure steam injection systems. In Texas, carbon dioxide will be used to force more oil out of the 1930s-era Means field.
Yes, there are finite resources in the ground, but you never get to that point, Chevron engineer Jeff Hatlen said. That’s why peak oil is a moving target. Oil is always a function of price and technology.But some petroleum geologists believe the peak is just about here, The New York Times said Monday. I am very, very seriously worried about the future we are facing, said Kjell Aleklett of the Association for the Study of Peak Oil and Gas. It is clear that oil is in limited supplies.Still, the Cambridge Energy Research Associates recently placed recoverable oil resources at 4.8 trillion barrels, up from the 3.3 trillion barrels estimated by the U.S. Geological Survey in 2000.
Copyright 2007 by UPI
http://www.earthtimes.org/articles/show/36971.html
April 17th, 2008 @ 5:50 pm
“One data point missed during the emergence of the supermajors between 1998 and 2000 was that they held less than 3 per cent of global proved oil and gas reserves.”
http://biz.yahoo.com/ft/080109/fto010920080455241250.html?.v=1
FT.com
***
Will Kirkland,
Any questions? I stand by every assertion made in my comment and can provide links as well. Klare IS a phony.
April 18th, 2008 @ 7:57 am
Atheo, Thanks for the data and links. You do fail to mention the projections are from CERA, Yergin’s Cambridge Energy Research Associates, and in fact a presentation Yergin made to Congress a year ago, March 2007 http://www.cera.com/aspx/cda/public1/news/articles/newsArticleDetails.aspx?CID=8689#_ftnref2
You fail to mention that Yergin thinks the Peak Oil theory is hokum, and that many others think, and have shown, that his past projections have been way off. You could start with the string of postings at The Oil Drum. http://www.theoildrum.com/tag/daniel_yergin
In fact you could find Klare quoting Yergin back in 2005 to point out oil prices were due for increasing spikes:
We’ve entered a new era of oil prices,” said energy expert Daniel Yergin in an April interview with Time Magazine. If markets remain as tight as they are at present, “you’ll see a lot more volatility, and you could see prices spike up as high as $65 to $80.”
http://www.tomdispatch.com/post/10216/michael_klare_on_entering_the_age_of_resource_wars
It doesn’t say what time frame Yergin had in mind, but with oil hitting $114 this week, the Goldman Sachs pesimism of $105 at the same time, were loser to the mark.
So, you may be a Yerginite and believe he is closer to the truth. Time will tell. In fact time has already told that his predictions are not very good. I don’t therefore think he’s a phony; I just think he has been wrong. Klare draws on plenty of data. He may be wrong, though I don’t think so. He’s certainly not a phony.
The questions can be argued on the merits. Facts generally, over time, will help us see the case — except for flat earthers, and climate change denyers.
By they way, the last link you provided is broken.
April 18th, 2008 @ 11:55 am
Will,
Daniel Yergin is the foremost oil industry expert. CERA is the most highly regarded source of oil industry analysis. Was Yergin wrong to forecast a price spike? Is there some award for guessing at future market prices? As we all know market prices have little to do with actual reserves.
The “oildrum” folks are simply quacks and cranks not a reasoned one in the lot.
As for the current manipulatd prices:
There Is No Gas Shortage
But Washington, Wall Street, and ethanol and oil and gas companies want you to think there is
by Ed Wallace
“They see speculation in the market, I see decline in global inventories. I don’t think this is a big surprise, that we’ve had a jump in price when there has been a decrease in crude inventories.” — Energy Secretary Sam Bodman, Bloomberg News, Mar. 5, 2008
“It should be obvious to you all that the [gasoline] demand is outstripping supply, which causes prices to go up.” — President George W. Bush, Associated Press, Mar. 5, 2008
One wonders if verifiable facts ever get in the way of this administration’s statements on issues that are critical to the average American’s wellbeing. After all, last time I checked, when politicians are elected to public office, or appointed, as is Energy Secretary Samuel W. Bodman, they must take an oath to the American people before assuming their new positions. How can they forget a sacred oath so quickly? Were they daydreaming when they took it, so it never meant anything to begin with? Maybe it’s just another promise you have to make to get into office: When you’re securely incumbent you can ignore even solemn oaths you took.
Obviously, the two quotes that led this article came from discussions concerning the current high price for oil on the futures market. Bodman appears to be protecting the speculators in oil, as opposed to looking after the interests of all Americans. President Bush, apparently, has never talked to the Energy Dept.’s Energy Information Agency to see whether gasoline demand is actually up. More troubling, the writer of that particular Associated Press article obviously didn’t look up the EIA’s numbers to verify the President’s assertions. They weren’t accurate.
1. There Is No Shortage
Gasoline reserves on hand are at the highest levels since the early 1990s, which is remarkable considering the nation’s refineries have been cutting back on the production of gasoline because their margins have declined. In fact, average gasoline reserves on hand have risen since this past October, while oil reserves in this country have gone up virtually every week this year—and only fog in the Houston Ship Channel that kept oil tankers from unloading their crude one week kept it from being every week.
In the same Bloomberg article that quotes from Bodman’s CNBC appearance on Mar. 4, he also said that it was thanks to ethanol that the gasoline problem isn’t even worse. He then added that the fact that making ethanol is forcing up prices of other farm commodities, including hog and chicken feed, is “nowhere near as important as trying to relieve pressure on [gasoline] supplies.”
Of course, there is no pressure on gasoline supplies in this country as of today, but Bodman’s statement must have made eyes roll among the executives at Pilgrim’s Pride PPC; the Pittsburg, (Tex.) poultry producer announced 1,100 layoffs on Mar. 13, closing one processing plant and 6 of their 13 distribution centers because their company’s outlay for chicken feed went up $600 million last fiscal year and was on track to increase by another $700 million this year.
Here’s the scorecard, in case you missed it. There’s no shortage of gasoline or oil in the U.S. today, and we have near-record reserves on hand. Meanwhile the Congressional mandate for ethanol has jacked up the price of chicken feed for Pilgrim’s Pride, which is the U.S.’s largest processor of chickens and turkeys—by $1.3 billion. And that’s for just one company processing chicken. This is what passes for acceptable to our Energy Secretary?
2. Demand Is DOWN, Yet Prices Are UP
Just so we can all get on the same page, here are the verifiable facts on oil supplies, production, and gasoline demand.
In January of this year, the U.S. used 4% less petroleum than we did a year ago. (Oil demand was down 3.2% in February.) Furthermore, demand has been falling slowly since July of last year. Ronald Bailey of Reason Online has pointed out that worldwide production of oil has risen 2.5% in the first quarter, while worldwide demand has grown by only 2%.
Production is expected to increase by 3.3% in the second quarter, and by as much as 4.1% by the third quarter. The net result is that the U.S. daily buffer for oil production against demand, which was a paltry 1.5 million barrels as recently as 2005, is now up to 3 million barrels in excess capacity today.
So what is going on here? Why would our Energy Secretary say there’s a supply and demand problem when none exists? Why would he say that speculators have little or nothing to do with the incredibly high price of oil and gasoline, when it’s clear they do? President Bush—a former oilman—gives the ever-growing demand for gasoline as the primary reason prices are so high, yet that notion can be dispelled with one minute of research. That’s the problem with rhetoric; it rarely matches the facts…
http://www.businessweek.com/lifestyle/content/apr2008/bw2008041_945564.htm?chan=top+news_top+news+index_businessweek+exclusives
For more discussion on this article your readers are invited to:
http://www.haloscan.com/comments/tf2777/article19764_htm/?a=48066
April 18th, 2008 @ 11:59 am
By the way Will, I did clearly attribute Cambridge Energy Research Associates as my source. There is nothing controversial about CERA in the real world.