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[Gene GeRue <genegerue AT ruralize.com>]

From a friend:

I've been reading extensively on the looming energy crisis (that most 
Americans are totally unaware of and wouldn't care about if they were!) and 
found this interview on the Guerrilla News Network. I've been reading Adam 
Porter's stuff on the alJazeera website for some time and this is 
interesting. As Bette Davis would say, "fasten your seatbelt, it's gonna be 
a bumpy ride."
Articles : Sci-Tech
Peak Oil: A Reality Check
Tue, 9 Nov 2004 10:18:29 -0800

By GNN
A frank discussion with oil correspondent Adam Porter
Editor’s note: Long-time GNN contributor Adam Porter is the oil and 
economics correspondent for Al Jazeera’s English language web site. A 
Londoner who recently moved to Catalunya, he heats his house with wood. 
Recently, he talked with GNN editor Anthony Lappé about the phenomenon 
known as “peak oil”:
GNN: What does “peak oil” mean?
Porter: It’s basically the idea that at some point in time oil production 
may peak. In other words that oil is a finite commodity and at some point 
we humans will only be able to get a certain amount out of the ground each 
day. Production may be curtailed by a number of factors, for example like 
we start to run out. At the point at which we have consumed 50% of the 
world’s available oil, getting enough of the stuff out of the ground to 
satisfy our daily demands may become impossible. That ‘peak’ may also be 
exacerbated by investment costs, like it costs a lot of cash (and energy) 
to build an oil rig.
It isn’t just a case of ‘oh we’ve run out’, it’s about being able to 
continue to provide the world with the oil it desires each day. If we fail 
to do that then you could imagine there would be giant leaps in the price. 
At the moment the rise in cost is because there is only around 0.5% of 
slack in the system. Less than 500,000 barrels a day in a system that 
consumes 83 million a day. Some people are saying this is the start of the 
peak. Others say it is under-investment by oil producers who were angry at 
very low oil prices ten years back. They would not invest so when 
consumption rose, for example in China, they were caught out.
Just for clarity some people, mainly Russians and a few others, think that 
oil is a never-ending commodity. That it constantly refills wells, seeping 
up from deep within the Earth. This is called the `Abiotic Theory.` If I 
may be so bold as to put forward a personal view, the Russians that 
invented this idea have been at the Crackski Pipeovich a bit too often.
GNN: How much oil is left?
Porter: This is indeed the correct question to ask as I would expect from 
GNN. No one knows. The history of oil has seen a lot of vested interests 
both downplaying and over stating oil reserves. To such an extent now no 
one really knows what is left. Basic examples are OPEC and Royal Dutch 
Shell. In the 1980s OPEC decided to allow each of its eleven states to pump 
oil based on how much they had in reserve. So, the more reserves you said 
you had then the more oil you could pump…and of course the more money you 
could make. Overnight, Kuwait’s reserves doubled. Which was handy for them.
Everyone followed suit including Saddam in Iraq and the junta in Saudi 
Arabia. What is more interesting is that since the 1980s, despite pumping 
millions of barrels a day, their stated reserves are the same today. In 
some cases they’ve even increased. The International Energy Agency have 
demanded urgent transparency in reserve figures so that we can continue to 
rely on their technical data. Even the IEA are scared they will simply 
become irrelevant because the stats they base their studies on are so 
obviously dubious. However, they may be waiting some time. If, for example, 
Saudi announced that their reserves were in fact half of what they said the 
oil market would go ballistic.
GNN: How much is in Iraq? The U.S. hasn’t made much money on Iraqi oil, 
doesn’t that undercut the theory that we went there for the oil?
Porter: Well, Iraq is very hard to tell. They still say around 112bn 
barrels but those are Saddam’s magic figures, actually with a little extra 
on top. There is certainly a lot of it and it is generally perceived to be 
cheap to extract since it is near the surface and doesn’t require huge 
amounts of cleaning like the Canadian tar sands you may have heard of.
As for U.S. foreign policy, I shall try and be brief. Whether you support 
President Bush’s worldview or not I think he had to go into Iraq. He 
couldn’t not go in. His ideology drove him and that ideology is underpinned 
by the God-given right of America to have all the cheap energy it requires. 
Oil is power, power is oil. The region is not going to be less important, 
it is going to become more important. Because if oil does peak five 
countries are going to have most of it. Iraq, Saudi, Iran, Abu Dhabi and 
Kuwait. So Bush, who understands the peak argument as he has said, simply 
could not avoid it. Of course beforehand they talked up the possibilities 
of cheap oil, welcoming Iraqis waving flowers and so on. I don’t think it’s 
worked out quite as they thought. But I don’t think they really mind. To 
President Bush an Iraq under Saddam is far worse than Iraq as a failed 
state full of U.S. troops.
GNN: What would happen if oil reached 60 or 70 dollars a barrel?
Porter: Well, this is interesting. Firstly oil costs take time to knock 
through. We are only starting to see the effects of $40 oil right now. Oil 
needs to stay high for a period of time, which it is doing. Then six months 
later you will start to notice effects. Rising transport costs will be one, 
rising food prices may well be another. Transport is very at risk from oil 
price increases as we don’t have wind powered cars or solar lorries. So is 
anything transported, like food. Of course, Americans are already seeing 
higher petrol prices at the pump and your heating costs have doubled in the 
past three years. The absence of tax in your country means the costs are 
passed on to you quicker as well, very similar to Iran in fact. Now there’s 
an irony!
However, some people think that high oil costs will be good for the 
economy. A huge cash infusion, like the internet boom v2.0 but with a 
smaller group of people benefiting.
But as for fifty dollar prices I reckon we will start to see the effects 
next springtime.
GNN: Why aren’t the major industrial powers panicking if the situation is 
so dire?
Porter: They certainly wouldn’t panic in public. Not good for votes/place 
in history etc. If they were trying to remedy the situation they might try 
and drill in previously protected wildlife reserves and/or invade other 
countries with lots of oil and I can’t see anyone doing tha… D’oh!
GNN: What’s the alternative?
Porter: Phew. In the long term renewables. In the short, energy 
conservation. That is the most important since renewables are still a long 
way off being effective. Especially, as I have mentioned, for transport. 
I’m afraid however that we should have started developing renewables some 
thirty years back. They really are a drop in the energy ocean, especially 
in the so-called emerging economies, China, India, Brazil. They are full of 
cars and lorries and motorbikes that no solar panel is going to replace.
GNN: Are people deluded about Hydrogen? What about sugar, corn and other 
alcohols?
Porter: Well, I can’t claim to be a major expert on hydrogen. But basically 
it provides somewhere between nil and bugger-all of our current energy 
needs. It does have possibilities, especially with transport but these are 
many years hence. The other fuels you mention also have possibilities but 
if we wanted a corn-based energy economy you would have to plant a hell of 
a lot of corn.
One of the things people forget about renewables is that it costs to create 
them. So how much of our current energy are you using to make this new 
energy? Hydrogen cells are of course plastic and metals, which we currently 
make from oil. Wind farms are made of metals and lubricated by oil and 
transported to the site by…er…oil. I would love to be able to tell you of a 
so called “bridge fuel” that will take us from the fossil fuel economy to 
the clean renewable one. It may be nuclear, and as I live in France I’m 
laughing about that. Having said that I hear nuclear also has some drawbacks…

GNN: Won’t the market take care of everything? If prices get too high for 
oil won’t that spur efforts to create new technologies or discover new fuels?
Porter: This is more opinion. Mine is, no chance. The market will drive the 
shortages as it will fuel price increases. This makes more money for those 
who own and produce the oil and its products. The market will not be 
interested in investing mega-quantum amounts of hard cash to try and make 
some fuels out of lentils. The people who own oil producing countries or 
oil companies will just hire a few extra security guards rather than 
speculate their wealth away. Price rises also make tiny oil fields, 
unprofitable at $20 a barrel, now profitable at $50. Make no mistake this 
is going to be a boom time for the oil industry. It is the rest of us that 
may have to worry if the arrival of the peak is correct. At the very least 
in the next few years they are going to have to spend billions in 
investment. The IEA said recently it would take $500bn a year for the next 
sixteen years, totally out of the question. It was such a stupid 
pronouncement I couldn’t understand what they were on about.
The principles of the so-called free market are a silly joke. They reflect 
nothing. Just my opinion though, much as I like looking at their 
machinations of course.
GNN: How will western society change if oil hits $80, $100 a barrel?
Porter: We will travel everywhere on pogo stick. Or maybe unicycle because 
we can’t afford the rubber for our bike tires. We will be clamoring for 
nuclear power stations. The poorest 50% of the world’s population and the 
richest 0.5% won’t notice anything has happened. Martha Stewert will say 
things like “I thought it had always been $25 a gallon,” which will spark 
riots near her last remaining Beverley Hills store. The others closed 
because people couldn’t afford to drive to them. There will only be one 
hour and a bit of TV a week. But at least that will be three episodes of 
the Simpsons on Fox. Fair, Balanced and Not Bankrupt Unlike The Others will 
be its slogan. You will be annoyed that you didn’t get that place with a 
garden, because now everyone who can grows as much of their own food as if 
possible.
Then again they have to give fifty per cent of it to the state collective 
system. You will eye your pet dog/cat as a source of possible protein if 
the winter is a bit harsh.
The blame for this decade-long economic “really very soft patch” (A. 
Greenspan Jr. 2014) will be heaped upon single mothers, the 1960s, an 
out-of-control robotic policeman in Detroit, the lack of space in the 
internment camps for liberals, Barbara Streisand and of course the 
still-at-large Osama Bin Laden who is now President of France. Oh, and the 
top 1% will get tax cuts to ‘kickstart the economy’.
Hey, you think I’m joking…?
[end]
For more on peak oil:
The End of Suburbia (documentary)
The End of Oil by Paul Roberts