Closing Prudhoe Bay
Posted by Heading Out on August 7, 2006 - 12:04am
Topic: Supply/Production
Tags: alaska, corrosion, north slope, oil, oil prices, peak oil, pipelines, prudhoe bay [list all tags]
Because of severe corrosion in one of the pipelines, BP is temporarily closing the production from the Prudhoe Bay oilfield, and, in the process, cutting off some 400,000 barrels of oil a day, some 8% of US production. The NYT story suggests that this might raise prices by as much as $10 a barrel.
ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.MSNBC, Yahoo, Reuters.BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.
Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.
and then let's not forget:
OPEC production down in July 0.8%.
Tomorrow will be an interesting day. More under the fold.
UPDATE: From Rigzone
The Department of Energy Monday said it would consider offering refiners oil from the nation's emergency oil stockpile to address supply concerns in Alaska resulting from BP's shutdown of Alaska's Prudhoe Bay field.
Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found ''corrosion-related wall thinning appeared to exceed BP criteria for continued operation,'' the company said in a release.The story is also on BloombergWorkers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and clean up efforts are under way, BP said. ''Our production while all this is in place is going to be marginal,'' said Will Vandergriff, spokesman for Gov. Frank Murkowski. ''That presents some technical problems because it's a high capacity line and it's meant to be filled.''
The pipeline leak and the discovery of corrosion ``have called into question the condition of the oil transit lines at Prudhoe Bay,'' Bob Malone, BP America President, said in the statement. ``We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment.''Unfortunately the leak problem is not, apparently confined to the pipeline. BP has recently closed a dozen wells at Prudhoe Bay because of leakage problems.
The story is also being carried in the Juneau Daily News which also noted that the story broke as the Alaskan legislature were voting on changing the states production tax laws. Sadly it also carries news that the champion Iditerod racer Susan Butcher has died at the age of 51.
UPDATE: 10:45 am Eastern
Thanks to Gunga2006 , here is a bit more information
BP spokesman Daren Beaudo later said it would take 24 to 36 hours to shut down the eastern half of Prudhoe Bay, but did not give an estimate on closing western wells. The shutdown does not include the Lisburne field, also on the North Slope, as inspection results showed that pipeline integrity was intact. . . . . . . Beaudo said the line continued to leak and that BP had collected another 70 barrels since finding the corrosion. Chappell said BP had never previously had to shut down the oilfield, which includes 22 miles of pipelines. However, it has had to curb production at Prudhoe Bay several times in the past year due to a series of incidents and spills on the North Slope, an oil-rich area that pumps a total of about 800,000 barrels per day (bpd), nearly as much oil as consumed by Australia. . . . . Output from the northern state peaked at over 2 million bpd in the late 1980s, but has more than halved since then. Chappell said it was premature to estimate what impact the outage would have on BP's annual production target of 4.1-4.2 million barrels of oil equivalent per day (boepd). At 100,000 bpd, BP's share of Prudhoe Bay accounts for 2.5 percent of that total, although its overall Alaskan crude oil output was a higher 268,000 bpd last year.And from The Street
Domestic inventories of crude, which are up 4% over last year, will help reduce some of the shock of the BP closure and force the U.S. to likely look abroad for more. But the shutdown of the country's largest oil field will likely keep prices high until it returns to full output. BP, though, could not estimate when that would occur. "While this is within the capacity of world reserves to cover, the market is already tight and this will only add to that perception, and intensify the response to threats, both real and imagined, yet to come," said John Kilduff, an energy analyst at Fimat USA in New York. The BP shutdown is just the latest factor contributing to the spike in crude prices, which have risen 21% this year. Clashes with Iran, the world's fourth-largest oil producer, over its nuclear program, militant attacks on Nigeria's oil infrastructure, downed production in the Gulf of Mexico and recent clashes between Israel and Hezbollah have further elevated prices.The timing of this is unfortunate for pipeline proponents, since the issue of the gas pipelines is not yet resolved. It was only last week that the BP Chief Executive, Lord Browne, was up there trying to sound nonchalant about the situation.
BP Plc Chief Executive John Browne said Thursday he hopes that a final agreement on financial terms for the proposed natural gas pipeline can be reached soon, but there is no need to rush, despite pressure from the Bush Administration and Alaska's governor. "It would be easy for me to say that there's a short window and give you a lot of arguments about that. Actually, the window is reasonably long for any project," Browne told a luncheon audience in Anchorage. . . . . . The visiting BP executive said his main reason for coming to Alaska was to check on repairs and upgrades at BP's North Slope operations. The repairs and upgrades were needed after a corroded Prudhoe Bay crude oil pipeline the company operated leaked about 200,000 gallons earlier this year. Browne said BP has launched an aggressive program to fix corrosion on its aging pipelines. "I take full responsibility for ensuring that those steps are carried through," Browne said.
If the SPR is drawn down because of pipeline corrosion, when will the be the next good time to fill it back up? Probably at the end of the hurricane season, sometime between the war with Iran and the summer driving season...
It might be an interesting bidding war against the rest of the world!
I quess the ultimate sign of peak oil having finally arrived will be the potential draw down in the SPR not being replaced for a variety of reasons, too expensive, can't afford it, don't want to disrupt the tight market right now, wrong time of year, waiting for a big check from the chinese to clear at the bank, when the weather...
Interesting times alright.
Whenever people talk of how high commercial stocks are, they neglect to say that 10mmb are from the spr that might never be repaid.
Right now the Republican party controls all four of these bodies - they have a majority in the house and the senate, the president is Republican, and most of the Supreme Court justices were appointed by Republicans.
All of the House and 1/3 of the Senate is up for re-election in November 2006 - they're finishing up primaries(nominations) now. Paradoxically, as the Senate cannot be gerrimandered, their races are much more competitive. While Bush cannot be re-elected for a third term, the issue is whether the Democratic party gains control of the House and the Senate this year - it looks somewhat possible right now. The fact that it's somewhat close is disappointing because this is probably the least popular president + Congress in history.
Bush could very well destroy the SPR (a really, really big oil drum supposed to hold a month's supply of our oil use for emergency + military reasons) for political reasons - his administration, to a degree unlike any in history, has politicized virtually all domestic policy.
Perhaps you meant you were feeling REALISTIC today?
~Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan, 1966), pp. 1247-1248.]
This begs the question: ¿Who gets to chose the policies?
As Deep Throat said: "Follow the money"...
"[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country, and the economy of the world as a whole. This system was to be controlled in a feudalist fashion, by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences.
The apex of the system was the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks, which were themselves, private corporations. The growth of financial capitalism made possible a centralization of world economic control, and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups."
~Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan, 1966) p.324
Who writes the policy? An offshoot of the Round Table Group, of course, that was established in 1921, The Council on Foreign Relations. This group states it is not part of the US government;
"Is the Council on Foreign Relations part of the U.S. government, the United Nations, or organizations such as the Royal Institute for International Affairs and the Trilateral Commission?
No, the Council is a nongovernmental, nonprofit, and nonpartisan organization."
http://cfr.org/about/faqs.html
Yet it is able to formulate policy such as the merging of the United States Mexico and Canada into a "North American Community".
http://tinyurl.com/ej63j
Lou Dobbs cover the story awhile back and it was on youtube but it has been removed. You can find the transcript here:
http://tinyurl.com/e8xgn
Why would you need to be part of the government if everybody in the government is a member?
Check the link below to see the extent of the current administration's membership in the CFR;
http://tinyurl.com/etzkx
==AC
At the end of the war of 1914, it became clear that the organization of this system had to be greatly extended. Once again the task was entrusted to Lionel Curtis who established, in England and each dominion, a front organization to the existing local Round Table Group. This front or
{p. 952} ganization, called the Royal Institute of International Affairs, had as its nucleus in each area the existing submerged Round Table Group. In New York it was known as the Council on Foreign Relations, and was a front for J. P. Morgan and Company in association with the very small American Round Table Group. The American organizers were dominated by the large number of Morgan "experts," including Lamont and Beer, who had gone to the Paris Peace Conference and there became close friends with the similar group of English "experts" which had been recruited by the Milner group. In fact, the original plans for the Royal Institute of International Affairs and the Council on Foreign Relations were drawn up at Paris. The Council of the RIIA (which, by Curtis's energy came to be housed in Chatham House, across St. James's Square from the Astors, and was soon known by the name of this headquarters) and the board of the Council on Foreign Relations have carried ever since the marks of their origin. Until 1960 the council at Chatham House was dominated by the dwindling group of Milner's associates, while the paid staff members were largely the agents of Lionel Curtis. The Round Table for years (until 1961) was edited from the back door of Chatham House grounds in Ormond Yard, and its telephone came through the Chatham House switchboard.
The New York branch was dominated by the associates of the Morgan Bank. For example, in 1928 the Council on Foreign Relations had John W. Davis as president, Paul Cravath as vice-president, and a council of thirteen others, which included Owen D. Young, Russell C. Leffingwell, Norman Davis, Allen Dulles, George W. Wickersham, Frank L. Polk, Whitney Shepardson, Isaiah Bowman, Stephen P. Duggan, and Otto Kahn. Throughout its history the council has been associated with the American Round Tablers, such as Beer, Lippmann, Shepardson, and Jerome Greene.
The academic figures have been those linked to Morgan, such as James T. Shotwell, Charles Seymour, Joseph P. Chamberlain, Philip Jessup, Isaiah Bowman and, more recently, Philip Moseley, Grayson L. Kirk, and Henry M. Wriston. The Wall Street contacts with these were created originally from Morgan's influence in handling large academic endowments. In the case of the largest of these endowments, that at Harvard, the influence was usually exercised indirectly through "State Street," Boston, which, for much of the twentieth century, came through the Boston banker Thomas Nelson Perkins.
Closely allied with this Morgan influence were a small group of Wall Street law firms, whose chief figures were Elihu Root, John W. Davis, Paul D. Cravath, Russell Leffingwell, the Dulles brothers and, rnore recently, Arthur H. Dean, Philip D. Reed, and John J. McCloy. Other nonle~al agents of llorgan included men like Owen D. Young and Norman H. Davis.
{p. 953} On this basis, which was originally financial and goes back to George Peabody, there grew up in the twentieth century a power structure between London and New York which penetrated deeply into university life, the press, and the practice of foreign policy. In England the center was the Round Table Group, while in the United States it was J. P. Morgan and Company or its local branches in Boston, Philadelphia, and Cleveland. Some rather incidental examples of the operations of this structure are very revealing, just because they are incidental. For example, it set up in Princeton a reasonable copy of the Round Table Group's chief Oxford headquarters, All Souls College. This copy, called the Institute for Advanced Study {ed. comment: the Australian National University in Canberra also has an Institute for Advanced Study. It's the leading research institute in Australia, and is staffed by Far Left academics in the Humanities, and by Economic Rationalists}, and best known, perhaps, as the refuge of Einstein, Oppenheimer, John von Neumann, and George F. Kennan, was organized by Abraham Flexner of the Carnegie Foundation and Rockefeller's General Education Board after he had experienced the delights of All Souls while serving as Rhodes Memorial Lecturer at Oxford. The plans were largely drawn by Tom Jones, one of the Round Table's most active intriguers and foundation administrators.
The American branch of this "English Establishment" exerted much of its influence through five American newspapers (The New York Times, New York Herald Tribune, Christian Science Monitor, the The Washington Post, and the lamented Boston Evening Transcript). In fact, the editor of the Christian Science Monitor was the chief American correspondent (anonymously) of The Round Table, and Lord Lothian, the original editor of The Round Table and later secretary of the Rhodes Trust (1925-1939) and ambassador to Washington, was a frequent writer in the Monitor. It might be mentioned that the existence of this Wall Street, Anglo-American axis is quite obvious once it is pointed out. It is reflected in the fact that such Wall Street luminaries as John W. Davis, Lewis Douglas, Jock Whitney, and Douglas Dillon were appointed to be American ambassadors in London."
~Carroll Quigley, Tragedy and Hope
and just as important, Citizens have responsibilities.
As for being consumers, that's how Americans were conditioned since they were born, Ronald McDonald and and Santa. It's hard to think out of that. Plus, this is a resource wasteful society for just the things you need like food, even without involving luxuries. And then, government sets up how the infrastructure is to suit the interests of corporations and results in the maximum consumption just to exist within it. This is just what happens when you put this technology and resources on a population of humans. It's nobody's fault. It's a phenomenon that happened and will end.
I completely disagree. Thinking like that is what's gotten the US into this horrible mess in the first place. It isn't "irrational" to get involved in your country's governance; its the most rational thing in the world. What could be of more value to an individual than to have some part in the process of ensuring that he or she plays an active role in the voting process, and thus has some hand in bringing responsible persons into power. There is no more basic duty as a citizen of a given country. If people aren't concerned about this, then they'll get the government they deserve -- and it won't be the one they want.
Americans don't get involved because of a sort of national hubris that says that no matter who's in power, our 'democracy' is so strong that things will just carry on the way they always have. As we can see now, this is hugely incorrect assumption that has engendered truly tragic results.
Other countries have citizens that are much more involved in the voting process. Witness the voter turnout in the world - country by country. The top 30 all enjoy over 80 percent turnout... while the US, at #139 is at 48.3 percent.
In short, contrary to your statements Americans are to blame for not getting involved in the voting process. If people from other countries can do it, there's absolutely no reason why high voter turnout shouldn't happen here. If it did, there would be hundreds of thousands of less casualties all around the world, and America would be much less hated.
Who was it that said, "If we hang apart, we hang like cool man"?
This might be true, but unpopularly elected governments (aka dictators) have a much worse track record...
Yes but the odds are very very good that the US and the rest of the Corporatocracy put the "unpopularly elected governments" into power for precisely that reason. Class warfare, so the countries would always be in turmoil and much easier to exploit....
==AC
"Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism in the American cotton districts, in the old rubber plantations, and in the factories of India, China and South Italy, appeared as generous supporters of and subscribers to the sacred cause of individual liberty."
~H.G. Wells: The Shape of Things to Come
;-)
==AC
Peakniks who understand very well the type of deliberate obfuscation the media and politicians have engaged in to hide the realities of peak oil should recognize that this level of deception is the rule, not the exception.
AC, thanks for posting the excerpts from Tragedy and Hope, maybe it will open a few eyes.
------------------------------
BTW, an interesting book on the history of the Fed Reserve is The Creature From Jekyll Island.
There are a lot good articles and books on the CFR, Roundtable, and Trilateralists - all well researched by historians and political scientists. The leaders and active particants of such groups are not obscure academics, they are very much entrenched in our political systems and include the likes of Rockefeller, Brzezinski, Kissinger, Carter, Clinton, Cheney, presidential cabinet members, senators, etc.
The evidence is contrary to this notion. Indeed, govt powers that be have known about the probabilities surrounding a declining fossil fuel base for decades. You need to research the geopolitics of oil, there are many scholarly books on the subject. Also, check out Michael Ruppert's article on the Pentagon's plans for the end of the grid. He has unearthed some very telling documents written by the Army Core of Engineers for the DOD.
Just because the paradigm of what a reasonable solution should be looks much different from your view or my view as compared to the view of the power elites does not mean they are unaware of what is at stake or the consequences of their actions.
I personally go along with the perspective that people like Catherine Austin Fitts (former Asst Sec of Housing under Reagan) have regarding the strategy of the power elite. In the words of Fitts, they appear to be using the "tapeworm economy" strategy to hollow out anything of real value or substance and then abscond with the loot when TSHTF. It is a situation of keeping the economic house of cards propped up until they are satisfied with their plundering and then they will depart leaving rank and file Americans holding the bag.
There are too many signs that something along the lines of what I have described is already in the making. Consider the imponderable $8 Trillion debt plus trillions more in unfunded liabilities, the real possibility of a weakened or collapsed dollar, the enormous economic bubbles (housing, derivatives, etc.) representing tens of trillions of dollars, the decision in March by the Fed to stop releasing M3 data (can you say inflation and fiat money?), and on and on.
And for the icing on the cake, last week I read that the administration decided to fire half of the IRS staff of lawyers who pursue irregularities in the estate tax system. If TPTB can't get congress to do away with the estate tax then they will do the next best thing. Add to that the fact that the IRS has reported that upwards of $2 Trillion of personal assets has been moved offshore. I understand that Cheney has been divesting himself of his American-based assets and buying foreign bonds/stocks.
Our best defense is to have a thorough understanding of what's happening and then share this information with others.
Look at what they did with the estate tax addon to the minimum wage bill. It wasn't enough to get an exemption for rich people bigger than the wage boost for poor people, they had to go farther and specifically exempt anybody who got tips from the minimum wage boost. See those tip jars? If you get tips you wouldn't get minimum wages anymore because of that addon. Thirty dollars a month in tips is what it takes to get exempted from minimum wage.
So everybody in the US is going to have a tip jar on their desk. If you go into the DMV and don't leave a tip, what's going to happen to your driver's license extension? Think about it.
In California we had an election where the Republicans got into office with the promise that they were going to screw over the blacks and liberals. They prompty got rid of overtime. All the blue collar conservatives without union contracts promptly lost their overtime, which means that the boss no longer had to worry about scheduling enough people to work so that he had the job covered because he could just hold you back from going out the door whenever he wanted with no overtime penalty.
Then they had an insurance commissioner who went into exile in Hawaii after the Northridge earthquake because he so favored the insurance companies that he had to skip town to avoid getting sued.
Know any poor people who had earthquake insurance in California, with our housing prices?
Republican corruption is a self correcting problem.
A dialectical method is used to steadily herd Americans down one path or another. This is often in the form of a sort of 'good-cop, bad-cop' routine. The neocons get power on the promises of leaner, more efficient govt then once in office plunder at will. American swing voters get fed up and then rush into the waiting arms of neoliberals who pursue endeavors to expand ineffective programs. After awhile frustration leads the country back to a GOP majority. We are given false choices.
In modern times the term Republican has too much of a confused meaning because neoconservatives don't have traditionally conservative values such as fiscal responsibility, national sovereignty, and environmental protectionism. Neocons are RINOs and a more appropriate term would be global fascists. Mussolini properly noted that fascism is the merger of state and corporate interests.
IMO, grassroots activism is the most effective tool ordinary Americans have against the status quo.
BTW, I do not intend to bash Dem voters. I was a lifelong Dem centrist until a few years ago when I was lucky enough to escape the political polarization vortex. As a voracious reader I came to understand the history and political dynamics behind our current 'system' and that has given me a much better vantage point for understanding our govt's reaction to peak oil.
It appears the only way the SPR could help the West Coast is to load the petroleum goodies on ships then send it through the Panama Canal to CA, OR, WA. Might be cheaper and faster to outbid, then divert a series of OPEC spot-market tankers.
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The Strategic Petroleum Reserve is a U.S. Government complex of four sites created in deep underground salt caverns along the Texas and Louisiana Gulf Coast that hold emergency supplies of crude oil.
--------------
http://www.fe.doe.gov/programs/reserves/spr/spr-facts.html
My crude research so far seems to indicate that the price spikes and fuel unavailability? will initially affect the US west spiderweb of petroleum.
Too bad for the West Coast but the Elk Hills, CA Strategic Naval Petroleum Reserves of one billion barrels were sold off along time ago. Strategic Naval Reserves now consist of The Teapot Dome Naval Petroleum Reserve in Wyoming - a small stripper well oil field that produces about 438 barrels of crude oil and 1,400 gallons of natural gas liquids per day from 540 wells in nine geological formations, earning approximately $5 million per year in revenues. Oh Joy!
http://www.fe.doe.gov/programs/reserves/npr/index.html
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Does anyone else feel weird about that twinge of excitement they may get when realizing these things? Not excitement that's eager or giddy or wanting stuff to happen, but excitement that is fascinated to see how the international oil markets respond to this. As others are saying, it's an effective way to gauge how much spare capacity there actually is.
I read this this morning and got sick my to my stomach. I take public transportation to work, but still I just don't see how any of this is any good.
The Methane gas bubbling out of the sea floor in California though is really troubling. That's the sort of thing that is not gonna be easy to stop.
Would we even hear about such production losses from those countries?
(I ask this because the feeling I get from a lot of the comments/stories here is that SA in particular is a black hole; no information escapes from the Saudis.)
As for the shut down pipeline. Weeeeee!
The edge of the post-oil era is gently washing at our feet. As supply diminishes, every little (to be expected) hitch in production from hurricanes to pipeline failures to routine maintenance to kidnapped workers in Nigeria will become more and more magnified.
The big worry is what will the powers-that-be do. Will they inform the public about the likely future, or will they see if they can fly by the seat of their pants for a little while longer? At some point the genie will be out for everyone to see and then we see if panic sets in and the US government decides to put extend the empire or if it starts the powerdown.
My guess is, "LOOK OUT IRAN, HERE WE COME!!"
Thanks for responding. Please note I wrote "what if.." I'm not stating it as a fact. I don't know really, I agree with the incompetence and stupidity thing. However, the current US administration has deliberately lied the country into this war, which is a conspiracy in and of itself.
"The poor countries of the world will bear most of the burden. But the United States will be in serious difficulties. There is, I think, a strong danger of some ill-considered military intervention to try to secure oil." C.J.Campbell
December 2000
At http://www.geologie.tu-clausthal.de/Campbell/lecture.html
Consider China, which is rapidly modernizing and militarizing itself. In order to achieve this objective it needs oil and other fossile based fuels to ramp up to the level of the US in any timely scale. Sorry Hybrid/Ethanol tanks and jets prolly won't hack it.
Further consider that the Pentagon and several military analysts have been looking at China as the next emerging Super Power. The US took the better part of half a century to get itself into the sole Super Power status.
Now consider this, the US moves into Afganistan and Iraq, strategically placing itself around Iran, and perhaps just as importantly, on China's doorstep. Now look at the current attention on the Middle East and specifically Iran. There is a steady incremental process to moves towards an invasion or at the very least an attack of Iran.
Keep in mind that the goal is denial of oil to your opponents. Lets say the US is incapable of reliably pulling oil from Iraq and Eastward. Those sources of oil have been providing China the fuel they've been needing to militarize. Now you knock out Gas and Oil production from Iran or perhaps just leave the threat of looming military action on the table to use as a bargaining chip to keep the Chinese in place since they need that source pretty badly.
Conspiracy? Perhaps. But it could also be viewed as brilliant pre-emptive military planning to essentially chop the legs out from underneath the single strongest communist presence remaining and furthermore the largest threat to lone Super Power status of the US.
Winning in war can be just as much about denying resources as it is about acquiring them. The "Either I get it, or nobody gets it" mentality.
We have become what Britain was in 1914. China is, amazingly, becoming what America was in 1914. American goods and loans had to keep flowing across the Atlantic to keep Britain alive in a crisis. If not now, then soon, Chinese goods will be irreplaceable to hold down the American cost of living, thus allowing the bosses to keep wages down. The incredible blessing of China loaning us our money back is also vital. There is no second Saudi Arabia to replace the first, and there is no second China. India is not becoming the all-purpose teat that China is.
At best, our two countries have the power of mutually assured economic destruction. It's getting worse for the US over time. If America's master plan is to use nuclear blackmail to coerce China to continue using oil to manufacture the toys that keep America's consumer/voters sated and lend us back the profits while slashing the oil ordinary Chinese need to survive, we will be revealed as the greatest attempted mass murderers in history. I'd then give us about 5 years before our bluff is called and the world is destroyed.
I completely disagree. From an oil standpoint, Iraq has been at least a 50% success, and a very important 50% success. Of course we wanted that production to go our way(which has really happened). But more importantly, we couldn't let that production go the way of China and our other international competitors. So, better to have the oil stuck in the ground for now, then to let it end up fueling the rise of China or India. Same will go for Iran, we can't let that oil continue to fuel the growth of our competitors at our expense.
Not saying that I agree with such lunacy, but that is how the strategic thinkers at the Pentagon think..
Robert NW Ohio
The Pentagon couldn't allow that to happen. Just like they will do anything to either keep Iranian oil flowing to us or if they don't ship it to us, they will make that it stays in the ground. DENY YOUR ENEMY ENERGY. That is the mantra they are following. If we can't get it, neither will they...
Robert NW Ohio
I also find it curious that there isn't more development going on in Iraq's oilfields. If their reserves were actually as large as they claimed, shouldn't every oil company in the world be trying to get into Iraq? Why would they even bother with deep-sea drilling, or tar-sands, if there were hundreds of billions of barrels just sitting out in the middle of the Iraqi desert?
I suspect that what the US goverment found when they raided the offices of the Iraqi Oil Ministry was that there wasn't nearly as much oil left as they'd been led to believe. Perhaps so little that it wasn't worth the investment to try to significantly increase production.
Invading Iraq wasn't a "mistake," and the administration got exactly what they wanted -- a switch back to the petro-dollar from the petro-euro. In my view, that was their main objective, though certainly not the only one.
Once Saddam started selling his oil in euros, his fate was sealed. If the dollar is supplanted as the main currency for oil transactions, then its toast. The ironic thing is that it might happen anyway, abetted by the world's revulsion to the invasion/occupation and its horrific aftermath.
There were many reasons that the Iraq invasion took place. I agree that one of them was for pure intimidation, but don't discount the petro-dollar casus belli, which was a primary, if hidden factor.
Witness the threats of nuclear annihilation which took place earlier this year when Iran was supposed to have their oil bourse set up to trade in euros. Bushco knows that without the lever of having the dollar as the world's reserve currency, the US economy, and its ability to extend its influence around the world, is done for.
http://www.norwichbulletin.com/apps/pbcs.dll/article?AID=/20060803/OPINION01/608030306/1014
And that "Spanish" company is Repsol. In 2004 after their test drilling the story was that "The project was considered a "high geological risk" by Repsol, which says it has a 20% chance of actually finding oil in Cuba." Link to story. That was back in 2004 during there tests, funny how there haven't been any announcements since then.
Here in Florida the msm seems to like to trot out the Chinese company (usually nameless) that is drilling in Cuba. That company (Sinopec) signed an agreement that was a small part of a wide economic cooperation pact. Specifically, the agreement was to develop a newly discovered field of 100 million bbls. Yet, the msm seems to think that this means that China is stealing our oil. link
Hopefully, this sudden shortage might instead serve as a wake-up call for the unwashed American masses to jumpstart conservation, Powerdown and prevent any desire for the '3 Days of the Condor' scenario. These pipes in Alaska are 25 years old or more, aren't they? I am no engineer, but it does make sense to repair/replace this tubing before it makes an oily mess. If this takes a year or more: conservation might have a chance to get ingrained into the masses.
On the other hand, if this shortfall is quickly made up by outbidding other countries thereby depriving them of oil--they will resent this action on our part. If crude jumps $10/barrel: does that suddenly tip 30 poor Third World countries onto a relentless march to Olduvai Gorge? I really have no idea.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Physically, this shortfall won't be made up by immediate outbidding - I would assume the oil takes a few weeks to get from the ground to the refinery.
Most likely any price jumps would be created by speculators and private enterprises, rather than National Governments.
I would suggest that any countries brought to the brink of the Olduvai Gorge by a $10 rise in oil were probably in the Olduvai to begin with - cheap oil just made a brief period of their history less Olduvai-ish.
So, while I don't disagree that we are stupid enough to go in, the only real cause is folly. I'd suggest everyone read the introduction to Barbara Tuchman's "The March of Folly," and then have a drink.
Well, how much does a potential increase of $10/barrel of crude translate into the retail cost/gal of gasoline? Does that mean a fifty cent increase/gal is likely in the next couple of weeks? The SPR is not in California as I recall, so will this sudden cutoff of Alaskan crude mostly affect the West Coast of the US? How bad could it get-- could CA cutoff the pipelines to AZ, NV? This is an interesting time!
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
I want to thank you, and the rest, for all this great news. I might be able to get to sleep tonight. Might. ;o)
Things are on a downslope anyway, lots of "FOR SALE" signs in front of houses with "price lowered" added on.....
This price is not percieved as crippling. Czechs are buying more and more cars, and choosing larger ones too. They may not like to commute as far as the average American but they do like summer driving holidays to the Mediterranean (500 miles away).
My point is that American gas prices will have to rise by more than a few dollars before it has any noticeable affect on consumption, or on the American love affair with the automobile.
I believe gas is still heavily subsidized in CZ. Also, your weighting in of average wages to calculate this US $ 17.54 gas price is shady; after all it is the succesfull that by the cars and fill their tanks, not the laborers.
I do agree with your point, though.
I love the public transport in Prague; never seen it better.
By the way, South Moravia will be our post PO hide out, my wife being Czech.
Best from Holland,
Paulus
I think you are right. Although it may affect the rest of the economy as people spend a greater persentage on fuel to drive around all over the place. It is also felt acutely at the local and state government level. You probably do schooling more sanely over there in Czech Rebublic, because here many districts spend a significant portion of the school budget on fuel to tranport kids around. Already tight budgets are straining with the unplanned for increase in outlays. Also at the state level, road repair and maintenance is much more expensive. Americans don't like taxes so something has got to give.
I'm not sure what the tipping point will be, nor what it will actually represent in terms of events on the ground, but major distruptions in many peoples' lives will occur once gas reaches $4/gallon, in my view.
This Austin Chronicle article from April, 2005, terrifying when I first read it, is soon going to be a reality.
Don't forgot the good 'ol human-powered bike.
I expect the global price to increase because the shortfall will pressure the spot mar