Wednesday, February 14, 2007


No Oil Crisis?

Peak oil can be a hard sell. Naturally, people don’t want to believe this because, if true, it means the end of the world as we know it. So, they come up with reasons for believing that there’s nothing to worry about. Let’s take a look at a few of their claims.

First, there’s a school of thought which claims that the US invaded Iraq and is planning to attack Iran merely at the behest of Israel. Certainly there is Israeli pressure, and the Lobby exercises considerable control over US politicians. But those who claim that the US does not want to take over Middle Eastern oil fields had better get a reality check. Just consider for five minutes what happens to the US economy and society without lots of cheap oil. Or better yet, consider what happens to the Empire’s military machine without lots of oil. Just a few moments of cogitation should be enough to realize that the Empire desperately needs to control as much of the world’s oil as it can, and to keep it from being sold to other countries (notably to China, in whatever currency). Military control of oil and other resources is becoming increasingly important, as evidenced by the recent announcement about the creation of AFRICOM, whose job it will be to secure supplies of Africa’s resources and energy. Additionally, military action is necessary to maintain and expand the “defense industry” gravy train, something that diplomacy or economic hit men could never accomplish. So military action in the Middle East brings in lots of business for the “defense industry,” takes over the major oil fields, and panders to Israel. Or at least that is the plan.

Second is the claim that the US will forgo Middle Eastern oil and instead rely on Canadian tar sand and Venezuelan oil. In other words, Middle Eastern oil is not needed. Poppycock. Venezuelan oil is largely heavy crude that requires a bigger energy investment, which means a smaller energy return. And Canadian tar sand? This, along with so-called shale oil, is the dregs of petroleum, requiring a huge energy investment and yielding not much more energy than you put into it. It would make no sense for the US to forgo high-quality and easy-to-pump Middle Eastern oil and satisfy itself with crap. For anyone who knows even a little about oil, this scenario is just plain wacky.

And then there is the claim that the oil companies are creating an artificial shortage to jack up prices. Sorry to say, jacking up prices can only go so far, as we have already seen. Look at the Indonesian fuel protests. Look at the very angry Americans who waited vainly in line to gas up their cars during the 1973 oil crisis. Look at the many people who are already forced to choose between heating and eating when winter rolls around. Even at these prices — where crude oil still costs less than bottled water by volume — there are warning signals. Prices are going up because demand has caught up with supply. At the same time, high prices serve another purpose: demand destruction. One by one, the little people get cut out, leaving the well-heeled, who can afford higher energy prices. This means that, at least for the time being, the markets can contract and still remain viable. And since markets are more important than people, this is essential. Demand must be brought into line with supply.

Those who don’t want to face up to reality can keep their urban condominiums and believe that abiotic oil or alien technology will come to the rescue. I wish them luck.

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