The Peakist

By Robert Kuttner  |  July 30, 2007
Boston Globe

HISTORICALLY, October has been the month for big financial busts. But this year, October could come early.

Investors and ordinary citizens have good reason to worry about a perfect economic storm: a deepening loss of confidence in the dollar leading to higher interest rates; the higher rates bringing a crashing end to a hedge-fund, private equity, and merger binge that has depended heavily on cheap borrowed money; the boom in bait-and-switch mortgages ending in a morning-after of rising defaults and sinking housing values; inflationary pressures in food, oil, and other commodities leading to still higher interest rates — all unsettling stock and credit markets and putting a new squeeze on consumers borrowed to the hilt. (more…)

By Javier Blas, Financial Times, Published: July 9 2007

The world is facing an oil supply “crunch” within five years that will force up prices to record levels and increase the west’s dependence on oil cartel Opec, the industrialised countries’ energy watchdog has warned. (more…)

Jun 7th 2007 | LONDON AND WASHINGTON, DC From The Economist print edition

Where do the Gulf states invest their immense wealth?

THERE is no crime involved, but the mystery of the petrodollar billions is worthy of Sir Arthur Conan Doyle. (more…)

A bitter energy dispute jeopardised oil supplies to western Europe today as Belarus struck out at neighbouring Russia by cutting off a vital transit pipeline crossing Belarusssian territory. The closure of the 2,500-mile Druzhba pipeline (druzhba means “friendship” in Belarussian), one of Europe’s biggest, meant no Russian oil was being pumped along it to Germany, Poland or Ukraine. (more…)

Dear Friends:
Over the past 10 years, we at Oilwatch have been building a strong and active network of resistance to the negative impacts of fossil fuels activities on peoples and their
environment. With member organizations from over 50 countries, we are dedicated to developing global strategies for the communities affected by the oil operations and of
supporting their processes of resistance in the struggle against those activities. (more…)

Michael T. Klare, author of “Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on Imported Petroleum” on ‘What Do Falling Oil Prices Tell Us about War with Iran, the Elections, and Peak-Oil Theory?’

“What the hell is going on here? Just six weeks ago, gasoline prices at the pump were hovering at the $3 per gallon mark; today, they’re inching down toward $2 — and some analysts predict even lower numbers before the November elections. The sharp drop in gas prices has been good news for consumers, who now have more money in their pockets to spend on food and other necessities — and for President Bush, who has witnessed a sudden lift in his approval ratings.

Is this the result of some hidden conspiracy between the White House and Big Oil to help the Republican cause in the elections, as some are already suggesting? How does a possible war with Iran fit into the gas-price equation? And what do falling gasoline prices tell us about “peak-oil” theory, which predicts that we have reached our energy limits on the planet? (more…)

Greg Muttitt of PLATFORM writes:
“Multinational oil companies have reaped record profits the last two years due to the high oil price. But behind the scenes, they are playing a longer game. Civil society should learn from their approach.Hovering around $70 per barrel – the highest level since the late 1970s[1] – the oil price has sparked focus on the theme of “energy security”, notably at this July’s G8 meeting. But this term is a misleading one, a cover for companies to take long-term control over oil and gas resources, at the expense of genuine security.

What is needed is to replace it with a genuine concept of energy democracy. (more…)

As Larry Elliott, economics editor of The Guardian reports, today both FoE and Shell issue reports on the cost of climate change:

“Failure to take action to combat climate change will cause environmental catastrophe and cost the global economy $20 trillion (£10.8 trillion) a year by the end of the century, the pressure group Friends of the Earth says today. In a report based on research from more than 100 scientific and economic papers, the group says allowing global warming to continue unchecked will mean a temperature rise of 4C by 2100, causing economic damage worth up to 8% of global GDP. The study coincides with research from the oil group Shell yesterday, which said the need to find solutions to climate change could create a £30bn market for British business over the coming decade.

Shell’s chairman, James Smith, said: “We do have to tackle climate change and that’s a matter for government, companies and individuals as well, because the costs in the coming years from rising sea levels, from floods and extremes of climate will be too high. The cost-benefit equation of action to tackle climate change is favourable. That’s true not just for the UK but internationally as well,” he said on the BBC Radio 4 Today programme.”
(more…)

Terry Macalister writing in Monday’s Guardian forsees the Western oil majors under threat and a future of re-nationalisation:

“A former government adviser has warned it is “only a matter of time” before BP or Shell faces a bid from a Russian state-owned group such as Gazprom which could threaten western oil supplies. Professor Peter Odell, an energy economist, says ExxonMobil is also vulnerable to a Chinese takeover as the large UK and American stock-listed oil groups lose their influence in global markets. “A Chinese bid for Exxon and/or Chevron and/or a Russian bid for Shell and/or BP, backed by funds provided by the wealthy member countries of Opec seem likely to be only a matter of time.

“With the ‘majors’ gone there will be concern in the main OECD countries for the future security of supplies,” he said in an unpublished speech to Opec ministers in Vienna last month. Professor Odell, who was an adviser to Tony Benn, the UK energy minister in the late 1970s and has since worked for a host of different foreign governments, said he was not being alarmist or deliberately controversial.

(more…)

Since oil prices took a nose dive over the last few weeks there has been much gloating from those with interests in denying oil depletion and the ill informed, claiming that somehow the peakist position was now discredited. Typical was The Australian, which happily conflated recent fears of spiking petrol prices with the peak oil position, before going on to uncritically confuse Exxon’s recent propaganda with reasoned argument:

“During the chaos of record prices, Goldman Sachs warned that the world could soon be paying $US100 a barrel for oil…The doomsday scenarios of Peak Oil theory - that we have already found most of the oil available and are rapidly running out - gained fevered currency. That interest has since subsided and the theory itself has been dismissed by oil companies.”

Whilst more informed commentators noted “What we have now is a moment of super volatility.”

It is with grim satisfaction therefore that we note, at the world’s most prestigious energy forum held last week in London - the 27th annual Oil & Money Conference - Robert Hirsch (author of the authoritative US Department of Energy report on oil depletion mitigation scenarios) told reporters he expected peak oil “within the next five to 10 years.’’ He went on to say that the mitigation effort required is on a par with “the race for the moon, or the mobilisation for World War II,’’ and that the world needs to spend $1tn a year on alternative fuels, starting 20 years before the peak in conventional oil production, in order to mitigate fuel shortages. According to Hirsch’s best guess, then, we are 10 to 15 years and 10 to 15 trillion dollars behind schedule. Source

A British ambassador warned that emergency services would not cope if terrorists blew up a strategically important oil pipeline heavily supported by the UK government, a Whitehall document shows, writes Rob Evans in The Guardian.

The £2bn pipeline, built by a BP-led consortium, is a vital source of crude oil for Britain and the west. Up to a million barrels a day are pumped through the pipe, which runs more than 1,100 miles from Azerbaijan through Georgia to Turkey.

Campaigners opposed the pipeline, which opened last year, as it passed through or near seven war zones, damaged the environment and exacerbated global warming. They told the government before it gave financial backing to the project that it was “a major security risk”. (more…)

By TODD LEWAN, Associated Press/MIAMI .Some facts about America’s trade embargo with Cuba: It’s been U.S. policy since 1961. It has yet to loosen Fidel Castro’s grip on power.  It has cost America little strategically or economically. Until now, that is.

From here on out, say a growing chorus of experts, America will pay a price for maintaining its 45-year trade ban with the communist nation — a strategic and economic price that will have negative repercussions for the United States in the decades to come.

What has changed the equation? Oil. (more…)

Money no object as the big players grab what is left of a diminishing resource

Terry Macalister reported in the Guardian on the huge prices oil companies are now paying for exploration rights - yet another signal of the unfolding depletion crisis and the shifting sands of global geopolitics as China positions itself for the oil end game and the producer nations gain unprecendented economic leverage. (more…)

In Monday’s Guardian, Larry Elliott, the economics editor, wrote a long piece on how the “knock-on effects of slower US growth will be felt in every corner of the globe,” the “day of reckoning” for the US debt binge may be delayed but is “now inevitable”. What was significant about the piece, however, was that Elliott stepped outside of the hegemonic thinking of mainstream economists to ask whether, on ” the brink of ecological catastrophe, we ought to lose our fixation with growth and concentrate on self-sufficiency and sustainability instead”. The Guardian may be a left liberal paper but for an economist to question the raison d’etre of growth is to put themselves about as left field as you can get. We need a radical shift in economic thinking towards a form of steady state, sustainable economy and this piece is a welcome recognition of that in the mainstream media. (more…)

“Oil has literally made foreign and security policy for decades…it…provoked the division of the Middle East after WW1; aroused Germany and Japan to extend their tentacles beyond their borders; the Arab oil embargo; Iran vs Iraq; the Gulf War. This is all clear.”

Bill Richardson, U.S. Secretary of Energy, 1999

“[The invasion of Iraq]… has nothing to do with oil, literally nothing to do with oil.”

Donald Rumsfeld, Nov 2002

“Let me deal with the conspiracy theory that this is somehow to do with oil. There is no way whatever if oil were the issue that it would not be infintely simpler to cut a deal with Saddam.”

Tony Blair to the House of Commons, 2003

“Every single empire, in its official discourse has said that is it not like all the others. That its circumstances are special , that it has a mission to enlighten, civilize, bring order and democracy, and that it uses force only as a last resort.”

Edward Said

Kevin Phillips is a former Republican strategist, (chief analyst on Nixon’s 1968 campaign) now bitterly opposed to the house of Bush and the religious right’s power in the
Republican Party. In his magisterial work “American Theocracy: the peril and politics of radical religion, oil, and borrowed money in the 21st century” (2006) Phillips argues
that every empire has been brought down by a combination of imperial over-reach , militant religion, ballooning debt and diminishing resources. Each of the modern world
powers depended on its leading command of an emerging energy technology regime – the Dutch water and wind power, the British coal and the US oil. And each
develops inertial forces that mitigate against it dominating the next historically emergent energy regime (such as the US built environments dependence on cars). For Phillips
it is not simply that American empire depends on oil, rather:

“…The Bush administration knew that the peak oil crisis probably posed strategic dangers far beyond those publicly acknowledged. The dollar’s role as the world’s reserve
currency was also tied to oil”. [p.69]

“…a final decision to invade Iraq seems to have been made in early 2001, for reasons that had been mounting since 1997. During the election year and 2001, five political
and policy end games – all felt by important constituencies to be pressing or even desperate [were] underway in what was historically an extraordinary convergence.” (more…)