[A-List] RE: Iraq and the Problem of Peak Oil (fwd)

[Andre Gunder Frank]

echoes of Mark


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ANDRE  GUNDER  FRANK                          HOME ADDRESS FOR ALL CONTACT
3 rue Comte de Ferraris, Apt 39                   Tel: 352 - 2668 4448
L-1518 Luxembourg, LUXEMBOURG                     Fax: 352 - 2668 4449 

e-mail: franka at fiu.edu  [till further notice]
personal/professional web-page:  rrojasdatabank.info/agfrank
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Professional Affiliations
LUXEMBOURG INSTITUTE FOR EUROPEAN AND INTERNATIONAL STUDIES -  Associate
UNIVERSITA DI CALABRIA DIPTO. DI SOCIOLOGIA [Italy] - Visiting Professor     
WORLD HISTORY CENTER NORTHEASTERN UNIVERSITY [Boston USA]- Senior Fellow
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Peerspectives from Historical Precedent
Alexander the Great [356-323 BC] admonished a pirate who responded that
because he uses only a small ship he is called a robber [terrorist?] while
Alexander commands a fleet and so is called emperor [of civilization!]

Those who exercise  power always arrange matters so as to give their
tyranny the appearance of justice  -  La Fontaine  AD 1668

The Government will regard as its first and foremost duty to revive the
spirit of unity and cooperation in the nation and  to preserve and defend
its basic principles of Christianity as the foundation of our national
morality, and the family as the basis of national life
   -Adolph Hitler, My New World Order Proclamation, Berlin,February 1, 1933
                               
The German invasion of Czechoslovakia is necessary to safeguard the human
rights of its Sudetengermans [Goebbels 1938]. The invasion of
Russia is to save Western civilization [Hitler 1941]. 

"I am strongly in favour of using poisoned gas against uncivilized tribes.
The moral effect should be good... and it would spread a lively terror..."
(Winston Churchill commenting on the British use of poison gas against
Iraquis after World War I). Today, his distant successor as UK Prime
Minister, Tony Blair, and US President George W. Bush are still ''saving
civilization'' by launching bombs and missiles there and elsewhere laced
with depleted uranium that has a nuclear half life as long as the whole of
the earth's.  Winston Churchill


As Geroge Keenan [Mr. X, the architect of Containment Policy] pointed out
in 1948 ''We have about half the world's wealth ...but only 5 percent of
its population.... In this situation ... our real job in the comung years
is to devise a pattern of relationships which permit us to maingain this
p;osition of disparity....To do so we have to dispense with all
sentimentality and day-dreaming, ... concentrate everywhere on our
immediate national objectives...[and] deal in straight power concepts.
The less we are hampered by idealistic slogans, the better" [Dept of State
Policy Plannng Study No. 23, 1948]. Since then, the already then terribly
UNfair world distribution of income has become about 3 times more unequal
still.
             Geoge Keenan
 
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---------- Forwarded message ----------
Date: Wed, 4 Aug 2004 10:33:14 -0600
From: World System Network <WSNMod at uwyo.edu>
To: wsn at listproc.ucr.edu
Subject: RE: Iraq and the Problem of Peak Oil



-----Original Message-----
From: Tim Jones [mailto:deforest at austin.rr.com] 
Sent: None
Subject: Iraq and the Problem of Peak Oil

"Iraq and the Problem of Peak Oil" is about as good a description
of the impending struggle in our future as any you'll find. More
and more, thoughtful observations on the peak in world oil
production, scarcity of cheap oil, and the implications for
humanity are trickling into our awareness. The article below
well describes the dilemma. Some think the top of the peak
in world oil production was reached in March, 2004. Colin
Campbell with Association for the Study of Peak Oil (ASPO)
estimates the peak will be in 2008.
China is rapidly industrializing. The demand for energy resources
is already exceeding supply.
Wars for oil are probably going to define America's  existence
for the foreseeable future.
(excerpt)
"If the peak oil analysis is accurate, it suggests why Washington may be
willing to risk so much to control Iraq and through its bases there, the
five oil-rich countries. It suggests Washington is acting from a
fundamental strategic weakness, not from absolute strength as is often
thought. A full and open debate on the problem of peak energy is
urgently needed."
 
Tim

Current Concerns - The monthly journal for independent thought, ethical
standards and moral responsibility.
No 1, 2004, P.O. Box 223, CH-8044 Zurich,
APhone +41-1-350 65 50,
Email: editors at currentconcerns.ch

<http://www.currentconcerns.ch/archive/2004/01/20040118.php>

 Iraq and the Problem of Peak Oil

<http://www.currentconcerns.ch/config_03/print.php?source=../archive/200
4/01/source/20040118.html&issue=No%201,%202004&on=Article%20published%20
on%2001-26-2004>
by F. William Engdahl

 Today, much of the world is convinced the Bush Administration did not
wage war against Iraq and Saddam Hussein because of threat from weapons
of mass destruction, nor from terror dangers. Still a puzzle, however,
is why Washington would risk so much in terms of relations with its
allies and the entire world, to occupy Iraq. There is compelling
evidence that oil and geopolitics lie at the heart of the still-hidden
reasons for the military action in Iraq.

 It is increasingly clear that the US occupation of Iraq is about
control of global oil resources. Control, however, in a situation where
world oil supplies are far more limited than most of the world has been
led to believe. If the following is accurate, the Iraq war is but the
first in a major battle over global energy resources, a battle which
will be more intense than any oil war to date. The stakes are highest.
It is about fixing who will get how much oil for their economy at what
price and who not. Never has such a choke-hold on the world economy been
in the hands of one power. After occupation of Iraq it appears it is.

 The era of cheap, abundant oil, which has supported world economic
growth for more than three quarters of a century, is most probably at or
past its absolute peak, according to leading independent oil geologists.
If this analysis is accurate, the economic and social consequences will
be staggering. This reality is being hidden from general discussion by
the oil multinationals and major government agencies, above all by the
United States government. Oil companies have a vested interest in hiding
the truth in order to keep the price of getting new oil as low as
possible. The US government has a strategic interest in keeping the rest
of the world from realising how critical the problem has become.

 According to the best estimates of a number of respected international
geologists, including the French Petroleum Institute, Colorado School of
Mines, Uppsala University and Petroconsultants in Geneva, the world will
likely feel the impact of the peaking of most of the present large oil
fields and the dramatic fall in supply by the end of this decade, 2010,
or possibly even several years sooner. At that point, the world economy
will face shocks which will make the oil price rises of the 1970's pale
by contrast. In other words, we face a major global energy shortage for
the prime fuel of our entire economy within about seven years.

 Peak oil

 The problem in oil production is not how much reserves are underground.
There the numbers are more encouraging. The problem comes when large
oilfields such as Prudhoe Bay Alaska or the fields of the North Sea pass
their peak output. Much like a bell curve, oil fields rise to a maximum
output or peak. The peak is the point when half the oil has been
extracted. In terms of reserves remaining it may seem there is still
ample oil. But it is not as rosy as it seems. The oil production may
hold at the peak output for a number of years before beginning a slow
decline. Once the peak is past however, the decline can become very
rapid. Past the peak, there is still oil, but each barrel becomes more
difficult to exploit, and more costly, as internal well pressures
decline or other problems make recovery more expensive for each barrel.
The oil is there but not at all easy to extract. The cost of each barrel
past peak is increasingly higher as artificial means are employed to
extract it!
. After a certain point it becomes uneconomical to continue to try to
extract this peak oil.

 Because most oil companies and agencies such as the US Department of
Energy speak not of peak oil, but of total reserves, the world has a
false sense of energy supply security. The truth is anything but secure.

 Case studies

Some recent cases make the point. In 1991 the largest discovery in the
Western Hemisphere since the 1970's, was found at Cruz Beana in
Columbia. But its production went from 500,000 barrels a day to 200,000
barrels in 2002. In the mid-1980's the Forty Field in North Sea produced
500,000 barrels a day. Today it yields 50,000 barrels. One of the
largest discoveries of the past 40 years, Prudhoe Bay, produced some 1.5
million barrels a day for almost 12 years. In 1989 it peaked, and today
gives only 350,000 barrels daily. The giant Russian Samotlor field
produced a peak of 3,500,000 barrels a day. It has now dropped to
325,000 a day. In each of these fields, production has been kept up by
spending more and more to inject gas or water to maintain field
pressures, or other means to pump the quantity of oil. The world's
largest oil field, Ghawar in Saudi Arabia, produces near 60% of all
Saudi oil, some 4.5 million barrels per day. To achieve this, geologists
report that the Saudis!
 must inject 7 million barrels a day of salt water to keep up oil well
pressure, an alarming signal of near collapse of output in the world's
largest oil kingdom.

 The growing problem of peak oil has been known among oil industry
insiders since the mid-1990's. In 1995, the leading oil consulting firm,
Petroconsultants in Geneva, published a global study, 'The World Oil
Supply.' The report cost $35,000, written for the oil industry. Its
author was petroleum geologist, Dr. Colin Campbell. In 1999 Campbell
testified to the British House of Commons, 'Discovery of (new oil
reserves) peaked in the 1960's. We now find one barrel for every four we
consume ...'

 No new giant discoveries

 After OPEC raised oil prices in the 1970's, non-OPEC oil projects began
to be profitable in the North Sea, Alaska, Venezuela and other places.
Oil production increased markedly. At the same time, in response to the
higher oil price, many industrial countries like France, Germany USA,
Japan dramatically increased the energy from nuclear power plants. The
combination gave the illusion that the oil problem had vanished. It has
not, far from it.

 If in fact many of today's major sources of oil have peaked, and are
about to fall off drastically, and at the same time, if world energy
demand continues to grow, and not enough oil is found even to replace
existing depletion, the global economy faces a crisis of staggering
dimension. This would also begin to explain the shift of US foreign
policy in the direction of a crude neo-imperial military presence
globally, from Kosovo to Afghanistan, from West Africa to Baghdad and
beyond.

 Obviously, the easiest, most economical solution is to find new giant
or super giant oilfields where large volumes of oil can be extracted and
brought to world markets at low cost. That is just what is not the case
today. According to a recent report from the Colorado School of Mines,
'The World's Giant Oilfields,' the world's '120 largest oilfields
produce close to 33 million barrels a day, almost 50% of the world's
crude oil supply. The fourteen largest account for over 20%. The average
age of these 14 largest fields is 43.5 years.' 1

The above study concludes that 'most of the world's true giants were
found decades ago.' Over the past 20 years despite investment of
hundreds of billions dollars by major oil companies, results have been
alarmingly disappointing.

 The world's major oil companies - Exxon-Mobil, Shell, ChevronTexaco,
BP, ElfTotal and others - have invested hundreds of billions of dollars
in finding enough oil to replace the existing oil supply sources.
Between 1996 and 1999, some 145 companies spent $410 billion to find
enough oil only to keep their daily production stable at 30 million
barrels a day. From 1999 to 2002, the five largest companies spent
another $150 billion and their production grew only from 16 million
barrels a day to 16.6 million barrels, a tiny increase. With the
collapse of the Soviet Union in the early 1990's, western oil companies
placed high hopes on the oil potentials of the Caspian Sea in Central
Asia.

 Disappointing Caspian results

In December 2002, just after US troops took Afghanistan, BP, a major oil
company announced disappointing Caspian drilling results which suggested
that the 'oil find of the century' was little more than a drop in the
ocean. Instead of earlier predictions of oil reserves above 200 billion
barrels, a new Saudi Arabia outside the Middle East, the US State
Department announced, 'Caspian oil represents 4% of world reserves. It
will never dominate the world's markets.' PetroStrategies published a
study estimating that the Caspian Basin contained a mere 39 billion
barrels of oil, and of a poor quality. Soon after this news, BP and
other western oil companies began reducing investment plans in the
region.

 Interest in West Africa

One of the most active areas of new exploration is in the offshore
region of West Africa from Nigeria to Angola. President Bush made a high
profile trip to the region earlier in the year, and the US Pentagon has
signed military basing agreements with two small strategic islands,
Principe and San Tome, insuring a military presence should anything
threaten the flow of oil across the Atlantic. Yet, while the volume of
oil is important, it also is hardly a new Saudi Arabia. Geologist
Campbell estimates that if all deepwater oil, perhaps 85 billion
barrels, were produced from fields off Brazil, Angola and Nigeria, it
would meet global demand for 3-4 years.

 Growing energy demand

 Against the prospect that many of the largest oil fields today are in a
marked decline in output, world demand for oil is rising ruthlessly,
marked by the growing economies of China, India and Asia. Even at
today's weak GDP growth rates, economists estimate that world demand for
oil at today's prices will rise by some 2% per year.

 Ten years ago, China was not a factor in world import of oil. It
produced most of its limited needs domestically. Beginning 1993 however,
China began to import oil to meet its economic needs. By end 2003 China
has surpassed Japan to be the second largest oil importer next to the
USA. China now consumes 20% of total OECD industrial country energy.
China oil imports are rising now by 9% a year and this is predicted to
rise significantly in the coming decade, as China emerges as the world's
largest industrial nation. China currently is growing at 7-8% a year.
India has recently emerged as a rapidly growing economy as well.
Combined they account for some 2.5 billion of the world population.
Little wonder that China vehemently opposed the US unilateral war
against Iraq in the UN Security Council. The China National Petroleum
Company had long sought to secure major oil supply from Iraq.

 What Cheney knew in 1999

In a speech to the International Petroleum Institute in London in
late1999, Dick Cheney, then chairman of the world's largest oil services
company, Halliburton, presented the picture of world oil supply and
demand to industry insiders. 'By some estimates,' Cheney stated, 'there
will be an average of two percent annual growth in global oil demand
over the years ahead, along with, conservatively, a three percent
natural decline in production from existing reserves.' Cheney ended on
an alarming note: 'That means by 2010 we will need on the order of an
additional fifty million barrels a day.' This is equivalent to more than
six Saudi Arabia's of today's size.

 Perhaps it was no coincidence that Cheney, as Vice President, was given
as his first major assignment the head of a Presidential Task Force on
Energy. He knew the dimension of the energy problem facing not only the
United States, but the rest of the world.

 Cheney is also well identified as the leading Iraq warhawk in the Bush
Administration, together with Defense Secretary Rumsfeld. Repeatedly it
was Cheney pushing for military action against Iraq, regardless of which
allies support it.

 When we examine what is known about global oil reserves, and where they
are, in light of the above 'peak oil' analysis of much of today's
existing oil production, it becomes clearer why Cheney would be willing
to risk so much in terms of America's standing among allies and others,
to occupy the oilfields of Iraq. Cheney knows exactly what the global
oil reserve situation is as former CEO of Halliburton Corporation, the
world's largest oil services company.

 The Achilles heel of the US?

The burning question is where will we get such a huge increase of oil?
In the decade from 1990 to 2000, a total of 42 billion barrels of new
oil reserves were discovered worldwide. In the same period, the world
consumed 250 billion barrels. In the past two decades only three giant
fields with more than one billion barrels each have been discovered. One
in Norway, in Columbia and Brazil. None of these produce more than
200,000 barrels a day. This is far from 50 million barrels a day which
the world will need.

 Is the era of cheap, abundant oil to fuel the world economy about to
end? One most important issue in the entire debate over why Washington
went to war in Iraq is the question of how much oil remains to be found
in the world at today's prices. The debate has been remarkably little
over an economic issue of enormous consequences.

 According to the estimates of Colin Campbell and K. Aleklett of Uppsala
University, five countries hold the overwhelming bulk of the world's
remaining oil and could potentially make up the difference as other
areas pass their peak. 'The five major producers of the Middle East,
namely Abu Dhabi, Iraq, Iran, Kuwait and Saudi Arabia (including the
Neutral Zone), with about half the world's remaining oil, are treated as
swing producers making up the difference between world demand and what
other countries can produce...'2.

 These five countries - Iraq, Iran, Saudi Arabia, Kuwait and the UAE -
through circumstances of geology, contain the oil and gas reserves vital
to the future economic growth of the world. In an article in the January
7, 2002 issue of Oil and Gas Journal by A. S. Bakhtiari of the National
Iranian Oil Company, noted, 'The Middle East (is) simultaneously the
most geostrategic area on the globe and the ultimate energy prize:
Two-thirds of global crude oil reserves are concentrated in five
countries bordering the Persian Gulf.'3

 In a paper published in November 2001, eminent Princeton geologist,
Kenneth Deffeyes wrote, 'The biggest single question is the year when
world oil production reaches a Hubbert peak and then declines forever.
Both the graphical and the computer fits identify 2004 as the probable
year. The largest single uncertainty is the enormous reserves of Saudi
Arabia.'4

 If the peak oil analysis is accurate, it suggests why Washington may be
willing to risk so much to control Iraq and through its bases there, the
five oil-rich countries. It suggests Washington is acting from a
fundamental strategic weakness, not from absolute strength as is often
thought. A full and open debate on the problem of peak energy is
urgently needed.



Footnotes:

1 'The World`s Giant Oilfields', Matthew R. Simmons, M. King Hubbert
Center for Petroleum Supply Studies, Colorado School of Mines, January
2002.

 2 Aleklett, K. and Campbell, C.J., 'The Peak and Decline of World Oil
and Gas Production,' published by the Association for the Study of Peak
Oil and Gas, www.asponews.org .

 3 Bakhtiari, A.M. Samsam, '2002 to see birth of New World Energy
Order,' Oil and Gas Journal, January 7, 2002.

 4 Deffeyes, Kenneth S, 'Peak of world oil production,' Paper no.
83-0,Geological Society of America Annual Meeting, November 2001.
gsa.confex.com.


Article published on 01-26-2004
-- 
<http://www.groundtruthinvestigations.com/>