DrumBeat: November 10, 2006
Posted by threadbot on November 10, 2006 - 9:21am
Topic: Miscellaneous
A Democratic-controlled Congress could mean both oil and gasoline prices will ease in the near future.
Democrats, now freshly in control of Congress, are likely to want to get more oil money into government coffers.The question is, how?
Voters in a Colorado university town nestled in the foothills of the Rocky Mountains have passed the country’s first municipal carbon tax to fight global warming. Boulder, Colo., will charge residents and businesses the carbon tax based on how much electricity they use. Most electricity in Boulder is generated at plants that use coal, which produces more of the main greenhouse gas carbon dioxide, than natural gas or oil.
IEA sees tighter oil market ahead
Surging demand and lower OPEC production may start to deflate world fuel stockpiles that have been filling at the fastest rate in 15 years, the International Energy Agency said on Friday.... "Demand growth in the fourth quarter is expected to be exceptionally strong," said Lawrence Eagles, head of the IEA's Oil Industry and Markets division.
"And that is not even allowing for a cold winter. If we see a cold winter it will be even stronger."
Mexico's energy crisis has arrived: Our NAFTA partner is running out of oil, and that's trouble for Canada
Mexican president-elect Felipe Calderón was in Canada last week to meet his NAFTA counterpart, talking trade and co-operation. Behind the smiles and warm words, however, there are serious questions brewing about just how Mexico will deal with a burgeoning energy crisis. Simply put, Mexico is running out of oil, and that could put extraordinary pressure on Canada and upset the global energy scene.
The concentrated distribution of the world’s most important natural resource in so many unstable and dangerous localities is truly one of modernity’s cruelest realities. Many of the most prevalent oil producing countries are hostile towards the West, despite their reliance on the U.S.’s oil demand for survival; Iran, Venezuela, Nigeria, Iraq, and Columbia to name a few.
Kenya's Maasai plead for help against global warming
NAIROBI (AFP) - Members of Kenya's Maasai tribe have appealed for "urgent action" to fight climate change, saying global warming for which they are not responsible is destroying their traditional way of life.On the sidelines of crucial UN climate change meeting in the Kenyan capital, they said their time-honored, cattle-based society is unjustly threatened by greenhouse gas emissions from developed countries far from their homes.
Albania is expected to suffer long hours of blackout from January 2007, which will be caused by the impossibility to import electric power, a source from state owned monopoly KESH said yesterday.
Energy Tribune Speaks with Guy Caruso
Since 2002, Guy Caruso has been head of the Energy Information Administration, the arm of the Department of Energy that tracks energy data. Caruso has over 30 years of experience in the energy sector and has held a number of positions within the Department of Energy. Before taking over the top job at the EIA, he was executive director of the strategic energy initiative project at the Center for Strategic and International Studies. He also has worked at the International Energy Agency and the United States Energy Association. Caruso spoke to ET’s managing editor, Robert Bryce, on September 27 in Ann Arbor, Michigan, during a meeting of the U.S. Association of Energy Economics.
Norway Oil Unions Mull Strike in Sympathy with UK Divers
Norwegian workers engaged in sub-sea oil and gas activities, excluding divers, are currently awaiting approval to strike at an unnamed field in the Norwegian North Sea, in sympathy action with U.K. divers who are on strike over wages, Norway union representatives have said.
Ecuador: Energy Crisis Looming
Oil Majors at Crossroads in Venezuela's Tar Oil Patch
Six hundred former employees from the likes of Royal Dutch Shell PLC (RDSB.LN) and Repsol YPF SA (REP) were chanting pro-government slogans on Tuesday, offering a preview of what the corporate atmosphere at four multi-billion-dollar Venezuelan tar oil projects will look like in a year's time.Six western oil majors must forfeit operational control or face the wrath of an administration steeped in oil nationalism at the peak of a domestic electoral cycle.
Nine Kidnapped Oil Workers Escape in Southern Nigeria: 50 taken hostage from oil platform
Alternative Energy Will Become Cost Competitive by 2007: Analyst
Alaska Votes No on North Slope Tax
Alaska voters shot down a proposal to tax oil companies $1 billion a year until they build a pipeline to take the largest reserve of natural gas in the United States from the North Slope to Midwestern markets, election results showed on Wednesday.
Saudi Accelerated Oil Plan May Offset Supply Crises
Saudi Arabia has accelerated its near-term production expansion plans and may add up to an additional 1.5 million barrels a day in crude output in 2010-2011 to mitigate potential supply disruptions and meet growing global demand according to a new report published by a Riyadh-based government consultancy.Nawaf Obaid, managing director of the Saudi National Security Assessment Project, said in a presentation given to U.S. federal energy, policy and security agencies that the kingdom plans to increase output capacity to as high as 13.5 million b/d by 2012.
Green Fuel to harness unused coal
A new type of coal-based fuel, which will soon be commercialized with federal backing, could harness America's vast low-rank coal reserves and make the country energy self-sufficient for the next 300 years or significantly supplant oil consumption, the chief of Fairbanks, Alaska-based Silverado Green Fuels.
Resource wars?
Let's examine these examples. I maintain that they are not illustrations of "self-interest" wars : they were losing propositions for all parties involved.
WWI was triggered by bungling, WWII by ideology.
The various parties to WWI did indeed have conflicting imperial interests. However, nobody launched the war as an instrument of policy. The interlocking nature of alliances, and the strategic constraints of the parties, made rapid escalation inevitable. But it could very well have been prevented, had there been a diplomat/statesman of the stature of, say, Metternich. And all parties would have been much happier and wealthier.
WWII : though it can be described as a "resource grab" on the part of Germany, in reality it was an irrational, ideologically-driven war which can in no way have been said to benefit the German people. It can be argued that Hitler could have won; if he had not attacked the USSR, etc. But the very fact that he did, against all logic, is proof that it was fundamentally an ideological war and not a self-interested one : it required a mystical belief in the superiority of Germans and the inevitability of their victory, to justify it in self-interested terms.
This:
I will concede that Africa, in particular, will continue to have resource wars; they are certainly not new there.
But today we have rational actors at the head of the major military powers (ok, GWB excepted, but they are not going to let him touch the buttons any more). The salutary corrective reaction of US electors confirms my "faith" in the relative stability of this situation. Russia or China might conduct resource wars, but only if they were damn sure of winning. No way would either one take a gamble or make a blunder like the Iraq invasion. There may be plausible scenarii (takeovers of Central Asian republics?) but they will not be cataclysmic.
Europe will not launch resource wars, because democracy will hold, and will demand moral foreign policies.
Lose-lose resource wars are possible in theory, but require recklessness and lack of information on the part of the perpetrators. Concerning the major military powers, I therefore count them unlikely, because information (and even diplomacy) are much better than they used to be.
Unequal treaties are going to be a growth industry, on the other hand.
The leaders have more information, but that doesn't mean the electorate that votes in leaders is really better informed. Besides <sarcasm> we are the world's only superpower, doesn't that mean we have a right to be rewarded for our efforts to maintain order? Doesn't that mean that we are entitled to our outsize share of the world's energy resources? </sarcasm>
And again (and again and again), I'm waiting to hear of a plausible scenario for a successful resource grab.
(And for anyone who defends the idea that the Iraq intervention constitutes a successful resource grab, I'd be interested in examining that proposition in detail.)
But a lot depends on the quality of the next presidency. Muddle and bungle, or a "moon-shot" effort to redefine America's energy economy?
You cannot imagine a "plausible scenario for a resource grab" because your thinking is limited by your First Worlder bias and because of your limited life experiences.
Look at our history since we learned to record it. Can you find a plausible example where we faced situations similar to Peak Oil and there was Not a "resource grab?"
The world has not even begun to feel the pinch of declining Energy and declining Matter.
"Civilized" applies only to those who can afford it. Humans are animals. All of our cute little "morals" and "ethics" are Negotiable. And even the Culturally Superior Westerners will sink to the same levels of depravity as those crazy africaners.
WRT central Asia, I think it's quite likely that China and/or Russia will end up with complete control over the oil producing republics (if they aren't already), but I don't expect war will be required. Much less trouble to pay off a local satrap. No gambling required.
Other than that, who are the candidate perpetrators and victims? I want to see lists. Anyone crazy enough to try another middle-eastern country? (The problem there is the people are so dumb, they don't know when they are beaten.) Or Venezuela? Please?
I know what people are capable of. I saw what happened in Yugoslavia. Atrocities perpetrated by people no different from your neighbours, or mine. Atrocities committed by nation states for economic reasons are another matter.
After the fact, you can graft on whatever other motives you want. Religion, resources. And they end up coming true.
You are asking the wrong question and that's why you are reaching to the wrong answer. The right question would be: is there a plausible resource-grab scenario for the powers that be.
I can assure you - there sure is! If PO starts to byte really hard, the only way the rich guys can prevent a revolution is to go military. Aren't we seeing that already happening??? These wars will not be for the resources only, they will be to counter the pressure from inside. Of course from a long-term point of view this will also be a doomed cause. But if you put yourself in their shoes, maybe at some point they will decide that they do not haveanu other choice.
The election of the Dem's sent a message(will it be heard?) Everyone seems to think that this will solve our problems, I don't. While I hope it lets the world know that we are not beholden to our leaderships path, I fear that politics is still about getting elected and that is the biggest part of the problem IMHO (ie the money and influence required - not the election process). There is a saying that democracies die when the public realizes that they can vote themselves benefits from the treasury.
The dem's had better get ready to get to work - changing people's expectation on energy and the sacrifices that are needed come first. Most people who think we need to reduce our energy use think that "someone else" is using too much not them. Good luck!
The US Dollar exists as it is today because US Dollars is how you get oil in the global market.
What would be the citizens reaction to a collapse of the dollar and an unwillingness of other nations to take the US Dollar as a means of trade?
I doubt a shrugging of shoulders and saying 'oh, that silly invisible hand'.
Britain was within days of losing its food and fuel supply due to U-boat activity in the atlantic.
We would not be in Iraq if the ME area had no oil and gas.
Alistair, perhaps you should read more about the actual history of these two conflicts.
There is no doubt whatever that there is a resource-access component in WWI, which I acknowledged in my original post. There are any number of alternative systems for reading that war. Orthodox power politics, Marxian class analysis (the ruling classes of the two sides colluded to emasculate the workers), etc, etc... None of these analyses is the exclusive truth.
But if you are alleging that the central powers <b>deliberately</b> launched WWI to shift the balance of power and grab resources, you are certainly going out on a limb.
And if that was their intention, it was hardly an unqualified success.
In any case, nobody has come up with anything even remotely resembling a modern resource-grab scenario. Which demonstrates my principal point.
There is no such thing as a 'rational actor'. The foundations of that assumption in neo-classical economics have all but crumbled. We can be rational and we can be emotional, depending on the conditions, but are definitely not rational all the time, especially at the top of social hierarchy.
A few quotes for now:
and
Im writing a post on this soon, but first I have to go shovel snow.
Gazzaniga's research on people with severed corpus callosums (sp?) is mind-blowing.
We are not who we think we are.
This is what I was getting at with the notion of "rational actor". Increasingly it's a matter of collective decision-making, and at very least, of accountability. Bush was an exception in that his administration has perverted the US democratic system. (I say "was" : I believe he is now a lame duck, he could no longer launch a war against Iran for example.) I anticipate that the US system is sufficiently resilient to correct this perversion and strengthen itself against future hijacking. I may be wrong.
That's not to say that collective decision-making is trouble-free, but at least it's not subject to the vagaries of cocaine, alcohol or whatever Huxley was smoking.
Since WWII the US has never declared war against another country: not North Korea, not North Vietnam, not Cuba, not Panama, not Iraq, not Nicaragua, not Libya, not Lebanon. Yet US forces have fought in all those countries (bar Nicaragua, and then there was the CIA).
The War Powers Act grants the President great leave to act in defence of the USA by military action, down to (effective) preemptive war.
If Bush wants to go to war with Iran, the only Constitutional measure which could stop him would be impeachment (and then the Vice President, Dick Cheney, would be President).
Can you see the Senate passing an impeachment bill with 2/3rds majority, with America at war with Iran?
2 slightly different views:
If there was goi9ng to be an impeachment, would their suddenly be a war with Iran?
If you belive the hardcore gold bugs position that 'bankers casued assination of the various US presidents', there are all powerful powers behind the elected leaders who would kill others, or whatever theories exist.....would it be simplier for others just to assinate the leadership? One claim of the oil being replaced in the marine helicopter is bouncing about on the internet.
Either situation woudl suck.
Perhaps the worry about the rection to the above is why the 'impeachment is not on the table' statements have been made.
Mob rule was rightfully feared by America's founders, and hence they designed a Republic, one with checks and balances between functions of government. A Republic by the way which was supposed to limit which people could vote and which couldn't. The whole idea was to preserve a "wiser" ruling elite. Admittedly I think their concept of land ownership indicating wisdom was a faulty one, but the premise of every person being allowed to vote has been a question bothering me for some time and the notion that everyone should be able to vote I sometimes wonder is perhaps the reason our political system is in the mess that its in and I sometimes wonder will be the downfall of this country.
Perhaps the crux for me is because fundamentally the notion of a wide body of "elite" and wise voters sounds like it has merit, but then the problem of determining who is wise is that nasty snafu one gets hung up on.
But I would never assume that Democratic governments are anywhere near rational, and I've said this before, that pure logic is not something I think humans would enjoy being ruled by. Pure logic probably would've had us killing off a lot of people already, as pure logic would dictate that its wasteful to spend resources on those members who are unable to support themselves. We place emotional value to things like welfare, and tending to the old and infirmed. The emotional value to me is a very important piece of our humanity and without it I think we would be even more brutal than we are with it, even when we see examples of emotion's darker side such as hate, jealousy and envy.
Should read:
that pure logic is not something I think humans would not enjoy being ruled by
VS the whims of the enforcers that now exist?
A system of logic where the rules are known sure sounds a lot better than a kleptocracy. Or a system based on favors. Or what ever it is that exists now.
I think the Israeli's are more likely to take the offensive step at this point: "Israel official: Strike on Iran possible." Then the US fleets in the Persian Gulf play the part of defender against Iranian counterattacks. When the Iranians inevitably hit one of our ships, we are in a position to legitimately counter-attack.
This looks to me like just as much an attempt at stalemating the Iranians as a real attempt to give us an excuse to strike. As in "We warned you that you should give up your nuclear program. Don't be surprised if the Israeli's aren't willing to wait for the UN. And don't expect to attack Ras Tanura or Persian Gulf shipping in response without setting off a much bigger conflagration." Come to think of it, the US would be pretty well positioned to seize Khuzistan in this process. We could claim that it was done in the interests of international energy security.
(Just because "B" follows "A" does not mean that "B" is related to or caused by "A." On the other hand, sometimes "B" is related to or caused by "A.")
Some Predictions Versus Results
Deffeyes:
Most likely peak for world C+C production was late 2005.
Data So far:
Declining world C+C production (EIA), despite oil prices trading in a range 50% to 100% higher than the previous (nominal) high.
Westexas (Brown, based on Khebab's data):
In a January, 2006 post on TOD, I predicted that KSA and Russia would join Norway in showing lower production---and thus lower exports--this year, based on the simple observation that the top three net oil exporters were more depleted than the world is overall.
Data So Far:
KSA is definitely down. Five of the past eight months of Russian C+C data (EIA)have been below the 12/05 number, and recent news reports indicate that production--and exports--are falling. Norway continues to decline.
A note regarding US Import Data (Total Petroleum, Four Week Running Average).
I think that these data points are sensitive indicators of where oil markets are headed. 68% of the weekly numbers this year have been below the 12/30 data point. The most recent year over year number is about 1.9 mbpd below the comparable time period for 2005, and about 500,000 bpd below the comparable time period for 2004, when consumption was lower.
Let me summarize. US total petroleum imports are trending down, while all of the avaiable data indicate that production--and thus exports--from the top exporters are trending down. IMO, if US consumers wish to continue consuming petroleum products at their current rate, they are going to have to outbid other consumers. So far, we have probaby been bidding against regions like Africa. I predict that the next round of bidding--against regions like Europe and China--will be much tougher.
Perhaps today you would like to explain to the casual user just what 'total petroleum' is. Give us some concrete answers so we can have a concrete debate, not an ideological one.
Otherwise, the same results from yesterday stand: Exports have not declined in any statistical meaningful way, and our Imports likewise have not been strained.
Based on the most recent EIA numbers, the world has produced about 100 million barrels less C+C than if we had just maintained the 12/05 production level. Note that this has narrowed somewnat because of the revised 12/05 number. However, as Khebab has noted, the EIA tends to downwardly revise all of the initial production estimates. In any case, the shortfall continues to grow.
This shortfall is against record high (nominal) oil prices. In other words, higher prices & lower production, while consumption in most exporting countries, such as KSA and Russia, is growing quite rapidly. I haven't looked at the most recent numbers, but as of the May numbers, the aggregate production by the top 10 exporters was falling faster than overall world C+C production is falling.
In regard to our imports, note that we are not the world. Someone has to be conserving. To date, I think that we have been bidding agasint the "easy" competition. Future rounds of bidding, against Europe and China, will not be so easy. In any case, our total petroleum imports have been below the 12/30/05 number since the beginning of the fourth quarter, and we have been draining our inventories to meet the shortfall. As I said, if we wish to continue to consume our present level of petroleum products, we are going to have to bid the price up.
Based on the most recent EIA numbers, the world has produced about 100 million barrels less C+C than if we had just maintained the 12/05 production level. Note that this has narrowed somewnat because of the revised 12/05 number. However, as Khebab has noted, the EIA tends to downwardly revise all of the initial production estimates. In any case, the shortfall continues to grow.
This shortfall is against record high (nominal) oil prices. In other words, higher prices & lower production, while consumption in most exporting countries, such as KSA and Russia, is growing quite rapidly. I haven't looked at the most recent numbers, but as of the May numbers, the aggregate production by the top 10 exporters was falling faster than overall world C+C production is falling.
In regard to our imports, note that we are not the world. Someone has to be conserving. To date, I think that we have been bidding agasint the "easy" competition. Future rounds of bidding, against Europe and China, will not be so easy. In any case, our total petroleum imports have been below the 12/30/05 number since the beginning of the fourth quarter, and we have been draining our inventories to meet the shortfall. As I said, if we wish to continue to consume our present level of petroleum products, we are going to have to bid the price up.
Regions now producing less oil (at least C+C) than their production in the vicinity of 50% of Qt:
Texas
Lower 48
Total US
Russia
North Sea
Saudi Arabia
Mexico
World
Any questions?
Well, I have one.
Just why is anyone still expecting rising oil production when all four of the current super giants are now either declining or crashing?
There seems to be wide disagreement as to whether these onshore declines will be balanced by a surge in offshore. As we all know, Colin Campbell and Skrebowski are both saying 2010, because of this surge of offshore.
I'm in no position to judge this, and I wonder if anyone is. We place our bets and see what happens over the next half dozen years. And hopefully we prepare; individually, if not collectively.