Friday, August 26, 2005

Peak Oil Hits the NYT

Well, the 'imaginary fear' that one commentor recently chided me over for has reached the pages of the New York Time's Magazine. This is something akin to a #1 college football team appearing on the cover of Sports Illustrated. The end must be very near indeed.

If the great defender of the staus quo is fearful of the story, the story must be old news indeed. I point to the time it took the Grey Lady to notice that Bush had lied to us as an example of this effect. And to their great reluctance to treat climate change with any seriousness until the evidence for it became overwhelming in the late 90's.

To anyone who has taken the time to honestly look at the numbers, this story will come as no great shock. Oil is a limited resource. We need oil in every increasing amounts for our energy profligate uber-culture to function. A collision between these two lines on the graph is inevitable.

The only real question remaining is whether we have the political, scientific, and indeed, social will to survive the transistion. Can we engineer enough technological and cultural changes in the time remaining to allow for a 'soft landing' or will there be a crash to end all crashes? Given the caliber and blindness of the oil cartel politicians curently in control in the USA, I have strong doubts that a soft landing is even possible. So I prepare for the crash.

Over the next few weeks I'll share with my blog's few readers some of the resources I've come across in my years of study and ask them to do the same for me. Maybe we at least can find a safe haven from the chaos looming.

from The New York Times Magazine (registration required)

The Breaking Point

Published: August 21, 2005

The largest oil terminal in the world, Ras Tanura, is located on the eastern coast of Saudi Arabia, along the Persian Gulf. From Ras Tanura's control tower, you can see the classic totems of oil's dominion -- supertankers coming and going, row upon row of storage tanks and miles and miles of pipes. Ras Tanura, which I visited in June, is the funnel through which nearly 10 percent of the world's daily supply of petroleum flows. Standing in the control tower, you are surrounded by more than 50 million barrels of oil, yet not a drop can be seen.

Oil Runs Through It...for Now: Shaybah, one of Saudi Arabia's oil fields, which all told can produce 10.5 million barrels of oil a day. The Saudis say they can boost production to 12.5 million barrels a day, or 15 million, or more. But there is a limit to how much you can ask of the earth, and it is fast approaching, some experts say.

The oil is there, of course. In a technological sleight of hand, oil can be extracted from the deserts of Arabia, processed to get rid of water and gas, sent through pipelines to a terminal on the gulf, loaded onto a supertanker and shipped to a port thousands of miles away, then run through a refinery and poured into a tanker truck that delivers it to a suburban gas station, where it is pumped into an S.U.V. -- all without anyone's actually glimpsing the stuff. So long as there is enough oil to fuel the global economy, it is not only out of sight but also out of mind, at least for consumers.

I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand -- most notably in the United States and China -- which has strained the capacity of oil producers and especially Saudi Arabia, the largest exporter of all. Unlike the 1973 crisis, when the embargo by the Arab members of the Organization of Petroleum Exporting Countries created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough oil to go around.

As Aref al-Ali, my escort from Saudi Aramco, the giant state-owned oil company, pointed out, ''One mistake at Ras Tanura today, and the price of oil will go up.'' This has turned the port into a fortress; its entrances have an array of gates and bomb barriers to prevent terrorists from cutting off the black oxygen that the modern world depends on. Yet the problem is far greater than the brief havoc that could be wrought by a speeding zealot with 50 pounds of TNT in the trunk of his car. Concerns are being voiced by some oil experts that Saudi Arabia and other producers may, in the near future, be unable to meet rising world demand. The producers are not running out of oil, not yet, but their decades-old reservoirs are not as full and geologically spry as they used to be, and they may be incapable of producing, on a daily basis, the increasing volumes of oil that the world requires. ''One thing is clear,'' warns Chevron, the second-largest American oil company, in a series of new advertisements, ''the era of easy oil is over.' (more)


John Tierney of the NYT chides Peter Maas in what Forbes Magazine calls a "devastating retort". Funny, I can't seem to find anything in the column other than some ad-hominem by-play about gambling on energy futures that even mentions oil. You decide.

And guys, using Julian Simon as a reference in resource discussions is akin to citing George W Bush in a discussion of the rights of non-traditional combatants on a battlefield. Simon wrote that over-population was not a problem but an asset, the human misery of hunger, war, and disease more than being compensated for by the increase in the potential market place. A truly evil man.

The $10,000 Question

Published: August 23, 2005

I don't share Matthew Simmons's angst, but I admire his style. He is that rare doomsayer who puts his money where his doom is.

After reading his prediction, quoted Sunday in the cover story of The New York Times Magazine, that oil prices will soar into the triple digits, I called to ask if he'd back his prophecy with cash. Without a second's hesitation, he agreed to bet me $5,000.

His only concern seemed to be that he was fleecing me. Mr. Simmons, the head of a Houston investment bank specializing in the energy industry, patiently explained to me why Saudi Arabia's oil production would falter much sooner than expected. That's the thesis of his new book, "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy."

I didn't try to argue with him about Saudi Arabia, because I know next to nothing about oil production there or anywhere else. I'm just following the advice of a mentor and friend, the economist Julian Simon: if you find anyone willing to bet that natural resource prices are going up, take him for all you can.

Julian took up gambling during the last end-of-oil crisis, in 1980, when experts were predicting a new age of scarcity as the planet's resources were depleted by the growing population. Julian had debunked these fears in "The Ultimate Resource," the bible of Cornucopian economics, which showed how human ingenuity had kept driving down the price of energy and other natural resources for centuries. (more)

update the second

A nice bit of counter fluffle at the Maas' article's biggest failing. Kunstler, an irredeemable pessimist like myself, is often dead on in his analysis. He certainly is in this case.

from Jim Kunstler at Clusterfuck Nation:
The New York Times chimed in with a cover piece in its Sunday Magazine titled The Beginning of the End of Oil? by veteran journalist Peter Maas. It presented a story that has been around the Internet for more than a year, based on investment banker Matthew Simmons' frequent public speeches about the apparent weakness in the Saudi Arabian oil industry (which Simmons published in book form last month as Twilight in the Desert). Apparently the Times editors have been mulling over the oil story for months and months, wondering if there is anything to it, and perhaps the movement of oil prices into the $60-plus range finally prompted them to run with it.

Maas's article is full of howling omissions and delusions. For one thing, Maas omits any serious reflection of the consequences of a global energy crisis, any specters of geopolitical blowback, or potential problems for America's non-negotiable easy-motoring way of life. That omission grows out of the delusional assumption that some magical market mechanism will conjure up a menu of just-in-time replacements for the vanishing oil. These are referred to as "alternative technologies," a term that points to a more fundamental delusion now rampant among the public, namely the mistaken belief that technology and energy are the same thing, that they are interchangeable, that you can substitute one for the other. Out of oil? Get new technology.

Note to public: technology and energy are not the same things, and continuing to think that they are may place our civilization in jeopardy.

The bottom line of the Times Sunday Magazine article is that they are still not convinced that global peak oil is for real, or that we necessarily ought to be worried about it, with all that "alternative technology" banging around out there in the innovational ethers of the magical market. They bring a magisterial cluelessness to the issue -- while the back pages of the Magazine are devoted to hawking the glitziest high-end products of the suburban housing bubble.

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