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129 comments on DrumBeat: November 29, 2008

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westexas on November 29, 2008 - 10:23am Permalink | Subthread | Comments top

Peace Through Oil Imports

This is a truly bizarre article in today's WSJ that takes the cornucopian argument to new heights of fancy. Howard argues that consumers have the power, and that basically that the US can, whenever we choose, begin a seamless transition from oil to other energy sources. Therefore, the oil exporters are dependent on the consumers. He talks about oil prices "crashing" to around $50, without any historical reference to the fact that oil prices, at $50, have risen at about 13%/year for the past 10 years.

In Howard's world, it would appear that depletion doesn't exist. If the oil exporters push the price of the oil up too much, the US will simply transition away from oil, so that we can, in effect, continue out auto centric suburban way of life, using alternative energy sources.

http://online.wsj.com/article/SB122791647562165587.html
WSJ Guest Column: An Ode to Oil
America's oil dependency has some benefits. Author Roger Howard on how the diminishing resource acts as a source of stability, and forces countries to work together.

In general, oil is such a vital commodity, for consumers, producers and intermediaries alike, that it represents a meeting point for all manner of different interests. Sometimes it offers an opportunity for competitors and rivals to resolve differences, as in March 1995, when Iranian President Akbar Hashemi Rafsanjani tried to break deadlock with Washington by offering a technically very demanding oil contract to Conoco. Today, the symbiotic energy requirements of Europe and Russia allows scope to improve mutual relations, not least if European governments act in unison to impose the rules of the European Union's energy charter on Moscow. Oil also gives consumers a chance to penalize, or tempt, international miscreants, just as U.S. sanctions are forcing the Tehran regime to reassess its cost-benefit analysis of building the bomb.

What cannot go unchallenged is a facile equation between oil on the one hand, and war, bloodshed and, in America's particular case, strategic vulnerability on the other. For oil, fortunately, can often be our guardian.

BTW, didn't Japan's attack on the US in 1941 have something to do with oil?

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cjwirth on November 29, 2008 - 10:50am Permalink | Subthread | Parent | Comments top

Hi Westexas,

I guess Howard is not aware of what has been written at the WSJ:

Environmental Capital (blog) http://blogs.wsj.com/environmentalcapital/2007/03/29/prepare-for-peak-oi...

March 29, 2007, 2:33 pm
Prepare for Peak Oil, GAO Warns
Posted by WSJ.com Staff

The Energy Department and other federal agencies need to develop a strategy to mitigate the effects of a peak in oil production, which most studies show will occur between now and 2040, the Government Accountability Office said today, in a study requested by members of the House Committee on Science and Technology.

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The Dude on November 29, 2008 - 10:53am Permalink | Subthread | Parent | Comments top

The other really off-kilter notion of his is that the only salvation for producing nations is to give Western majors a warm embrace. Yeah, Pemex inviting Fluor and company to build that N2 plant has really worked out well for them. Apparently he hasn't read about TNK-BP either, or gotten an invite to the parties the RIK department of the MMS threw. Political will, eh?

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Carolus Obscurus on November 29, 2008 - 11:13am Permalink | Subthread | Parent | Comments top

Westexas,

Bizarre is the mot juste.

In fact, Howard sounds like a highly informed analyst who has one major conceptual problem: he can't interpret his own data correctly.

Extracts from his article:

Although oil has been the primary source of [Syria’s] national income for more than 40 years, production has recently waned dramatically: Output is now nearly half of the peak it reached in the mid-1990s …
Many wells are aging rapidly and the Iranians cannot improve recovery rates …
But in the past year Russian oil production has started to wane. … national output had peaked and was unlikely to return to 2007 levels ..

Like individual countries are post peak but the whole world isn't really post peak and the less there is the cheaper it gets because a miracle will happen.

Or something like that.

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tstreet on November 29, 2008 - 11:41am Permalink | Subthread | Parent | Comments top

So, this turns dependence on its head. Dependence is a good thing. Independence is a bad thing. Well, we're doing a damn good job of becoming dependent. Russia has the power to pretty much shut down Europe. Saudi Arabia has the power to deliver a major body blow to the U.S. Yeh, great. Let's continue to slurp up that oil. Also, I guess the mantra "drill, baby drill" is no longer operative.

Immediately above WT's comment is more bad news regarding global warming. Enough already with the fossil fuels, whether it's oil,natural gas, or coal.

It would appear, according to the author, that getting off oil is easy. Well,let's get crackin'.

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Soylent on December 1, 2008 - 1:48pm Permalink | Subthread | Parent | Comments top

So, this turns dependence on its head. Dependence is a good thing. Independence is a bad thing.

Independence is a faustian bargain. There's nothing really magical about country borders; you could strive for independence from the rest of your country, or from the rest of your state, or from the rest of your local community or even from anyone outside your family.

Independence is synonomous with poverty; particularly if you take it to extremes. The more diverse the set of people, expertize and resources you can pull toghether to cooperate the more efficiently you can create utillity; the most striking example is any form of entertainment media, software or electronic hardware(to design and start manufacturing high-end processors it takes billions of dollars, a vast body of knowledge and skill from tens of thousands of people working in academia, industry, software and hardware algorithms, litography, marketing, power conditioning and UPS, air quality control, stress testing and statistical analysis of failure rates etc.) where the initial cost is high but the cost of each additional copy is low.

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129 comments on DrumBeat: November 29, 2008

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