Energy Security

[Rick M]

An annotated bibliography of energy security studies which have been conducted by analysts from the military/security research community has been posted at Energy Bulletin:
http://www.energybulletin.net/node/50208

Many of these studies conclude that peak oil is indeed a credible near-term concern, and they have been flagged accordingly.

By presenting this bibliography, my hope is that the credibility of these military/security analysts will speak for itself: if they view peak oil as a credible concern, then the rest of us really should take note.
As always, I thank you for considering this information, and I would appreciate your observations.

[Rick M]

We have had increasing warnings about a near-term oil supply crunch.
The warning with the strongest language yet appeared today in an interview with Sadad al Husseini (former senior official with Saudi Aramco).

Here are Sadad's main points (all direct quotes from last week's recorded interview):
- there are not enough projects. There is not enough new capacity coming on line, within the next five to six years, to make up for global declines.
- we are basically going to see a shortage of capacity within two or three years. We're being lulled by this current excess capacity....
- we do have a problem in the near term. In the longer term it's even worse.... So it's both a short and long-term problem.
- from 2003 forward, oil production has hardly increased. So the information is there.... the market it not able to deal with these realities... people can't deal with these realities.
- [we can't] act as if these issues don't exist and then wait for some solution to materialize out of nowhere.

Here is the EB link to this interview:
http://www.energybulletin.net/node/50234

[Rick M]

I returned a week ago from the international ASPO conference in Denver, which was a remarkable 3-day experience.

I know that peak oil is hardly a favourite topic, but I would like to offer you the latest info:
First, the recent data on declining oil exports is very concerning… it is hard to imagine how we will make it through the next decade without a significant drop in available oil exports, which is bound to produce a more sustained price spike.

Second, an excellent UK study was released yesterday regarding government inaction on peak oil.
This study is reviewed in the first item, which provides a link to the original document:
http://www.energybulletin.net/node/50447

Third, CBC in Canada is finally moving on peak oil and there will be some info on CBC Radio's "The House" this coming Saturday morning.
More on that later.

[slapout9]

I returned a week ago from the international ASPO conference in Denver, which was a remarkable 3-day experience.

I know that peak oil is hardly a favourite topic, but I would like to offer you the latest info:
First, the recent data on declining oil exports is very concerning… it is hard to imagine how we will make it through the next decade without a significant drop in available oil exports, which is bound to produce a more sustained price spike.

Second, an excellent UK study was released yesterday regarding government inaction on peak oil.
This study is reviewed in the first item, which provides a link to the original document:
http://www.energybulletin.net/node/50447

Third, CBC in Canada is finally moving on peak oil and there will be some info on CBC Radio's "The House" this coming Saturday morning.
More on that later.

Nothing to worry about that Invisible Hand is just gonna swoop down and fix everything

[Dayuhan]

an excellent UK study was released yesterday regarding government inaction on peak oil.

I personally don't think that we should point the finger at "inaction on peak oil" or demand action "on peak oil". The danger there is that if the supply/demand equation moves at any point in a direction not compatible with peak oil theories, that can serve as a justification for abandoning policies that are likely to be unpopular.

Better I think to emphasize that overdependence on oil exposes us to a whole range of risks, including but by no means limited to absolute depletion and the peak oil hypothesis. That emphasis can drive a range of actions from both public and private sectors, ranging from increased investment and development of investment structures that satisfy host country nationalism to greater efficiency, conservation, and plans for sudden shortage.

The "invisible hand" actually has a vital role to play, and it is critically important that oil remain expensive regardless of supply/demand shifts. Policies to manage the range of risks resulting form oil dependence require will on the part of government, business, and the populace; when the price of energy drops, that will evaporates.

[Bill Moore]

Posts by Dayuhan,

I personally don't think that we should point the finger at "inaction on peak oil" or demand action "on peak oil". The danger there is that if the supply/demand equation moves at any point in a direction not compatible with peak oil theories, that can serve as a justification for abandoning policies that are likely to be unpopular.

I thought you posted some excellent insights. I would add that if there is a favorable demand in either supply or demand that permits lower fuel prices it will serve as justification for abandoning sound policies that are likely to be unpopular, which means we will postpone further investment in exploration and investing in alternative forms of energy and energy efficiency technologies, so once again we'll admire (and do nothing about it) the problem we see coming until it is a crisis.

Better I think to emphasize that overdependence on oil exposes us to a whole range of risks, including but by no means limited to absolute depletion and the peak oil hypothesis. That emphasis can drive a range of actions from both public and private sectors, ranging from increased investment and development of investment structures that satisfy host country nationalism to greater efficiency, conservation, and plans for sudden shortage.

I suspect we're putting more money in the hands of Islamist extremists driving SUVs and other fuel inefficient vehicles than the kids buying dope linked to organized crime and violent extremist groups. Oil money going to the Middle East provides the wealth for the fundamentalists to generously donate to their favorite group ranging from Hamas to Al Qaeda. There are a host of other geopolitical risks related to our dependency on oil that could easily drag us into another conflict that we could otherwise avoid.

The "invisible hand" actually has a vital role to play, and it is critically important that oil remain expensive regardless of supply/demand shifts. Policies to manage the range of risks resulting form oil dependence require will on the part of government, business, and the populace; when the price of energy drops, that will evaporates.

I tend to agree, so if you're right, then the crisis is unavoidable, thus one focus should be on what does the crisis mean to our national security, how do we mitigate the crisis (versus prevent it).

[slapout9]

The "invisible hand" actually has a vital role to play, and it is critically important that oil remain expensive regardless of supply/demand shifts. Policies to manage the range of risks resulting form oil dependence require will on the part of government, business, and the populace; when the price of energy drops, that will evaporates.

What you are talking about is a rational Government Policy designed to protect it's citizens and that is the total complete opposite of the "invisible hand" theory.

[Dayuhan]

What you are talking about is a rational Government Policy designed to protect it's citizens and that is the total complete opposite of the "invisible hand" theory.

That's not what I'm talking about, actually. High oil prices are a prerequisite for rational Government policy, not a consequence of it. Of course Government action to keep oil prices high would be rational and desirable, but it's also unthinkable: any politician that proposed such a course would be charged with promoting the interests of oil companies and ay-rabs and would face public crucifixion. Disquieting though the thought may be, we rely on the invisible hand to keep energy expensive. The initiative will not come from government.

The problem is vexing enough to start with; it is made far more so by the American public's apparently unshakable conviction that cheap abundant fuel is an inalienable right that government is supposed to protect and preserve. Even at the peak of the recent oil price surge, polls showed huge numbers of Americans believing that there was really no supply/demand interaction behind high prices and the whole thing was an oil company plot. We the people just don't get it, for the most part.

I suspect we're putting more money in the hands of Islamist extremists driving SUVs and other fuel inefficient vehicles than the kids buying dope linked to organized crime and violent extremist groups. Oil money going to the Middle East provides the wealth for the fundamentalists to generously donate to their favorite group ranging from Hamas to Al Qaeda.

On this I'm not so sure. I think AQ found it much easier to raise support and money during in the gulf during the oil glut and consequent economic misery of the 90s than they did during the recent oil boom. Ideologies of hate and victimization are harder to sustain during prosperous times. If we stop putting money in the hands of the Gulf Arabs, and a real economic collapse ensues, AQ will have a wonderful time exploiting that. Of course there would be less money around for them to raise, but there will always be some and they really don't need that much to make a mess. I personally think prosperity in the Gulf accrues to our favor, while poverty favors our opponents.

if you're right, then the crisis is unavoidable

Not necessarily. I said that the will required depends on high oil prices, but I do think high oil prices are likely to continue even without any Government action, which is a plus point. There will certainly be change and there will certainly be some level of dislocation and discomfort (likely to be interpreted by media as a crisis), but I do not see cataclysmic events as inevitable. We rely on a factor we do not control - sustained high prices - to reduce consumption, increase production, and drive investment and innovation, and to a large extent the near to medium term energy equation will be driven by political events in countries that we also cannot control. All this lack of control is not reassuring, but it's something we need to learn to work with.

[Bill Moore]

Posts by Dayuhan,

I think AQ found it much easier to raise support and money during in the gulf during the oil glut and consequent economic misery of the 90s than they did during the recent oil boom. Ideologies of hate and victimization are harder to sustain during prosperous times. If we stop putting money in the hands of the Gulf Arabs, and a real economic collapse ensues, AQ will have a wonderful time exploiting that. Of course there would be less money around for them to raise, but there will always be some and they really don't need that much to make a mess. I personally think prosperity in the Gulf accrues to our favor, while poverty favors our opponents.

I'm only speculating, but the oil glut in the 90s probably didn't significantly impact the wealth of the elite in the Gulf States. Assuming that their wealth is impacted significantly in the future, then theiir generous donations to NGOs that are nothing more than front companies for extremist groups would have to be decreased, which over time would have a negative impact on a number of terrorist groups. Weapons, militant salaries, ammunition, medical, etc. all cost money, and those prviding them have the money.

Not necessarily. I said that the will required depends on high oil prices, but I do think high oil prices are likely to continue even without any Government action, which is a plus point.

Depends on what you consider "high" oil prices. From what I'm reading the oil industry needs to maintain the price around $70.00/barrel to break even (a lot of factors, but probably true for the oil sands in Canada and the deeper wells in the ocean where exploitation simply costs more). There is no guaruntee that oil companies will intelligenty invest those profits to ensure a sustainable future, but that is another issue. Back to the main point, once the current economic crisis passes we'll be able to sustain economic growth at that price, but if it goes higher it is questionable. $100.00/barrel oil had a significant impact on the economic growth, but it didn't happen over night, so while we can survive spikes, I remain less optimistic about sustained high prices and think governments will intervene with subsidies, etc., which will only delay the pain.