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    Peak Oil and the Tip of an Iceberg

    By Beetlejuice on Sun, 10/23/2011 - 12:39pm |

    While casually drifting on the Info Hiway, I ran across a few articles that made me sit up and think peak oil is nothing but a side issue.

    First, here's a quote In 1924, President Coolidge wrote in 1924 ...

    “... the supremacy of nations may be determined by the possession of available petroleum and its products ...”

    From what I read, by the 1910s, the United States was pumping between 60 and 70 percent of the world's oil supply from our own backyard ... Texas. It wasn't too long before people began to think US oil reserves were dangerously depleted, so the search for new oil reserves turned worldwide. However, those fears ended in 1924, with the discovery of enormous new oil fields in Texas, Oklahoma, and California. Along with other finds from new fields in Mexico, the Soviet Union, and Venezuela, all combined to drastically depress oil prices. In fact, there was so much oil on the market, the price for crude fell to 10 cents a barrel.

    Oil actually became a weapon of choice in WWII ...

    "... the attempt to conquer its sources or to manufacture it, the attempt to deny it to an enemy-was a major factor in determining the strategy of World War II ..."

    The margin of victory achieved by the factories of America was by the sheer mass of fighting machines produced due to an uninterrupted supply of oil. The Allied floating and flying fleets and mechanized armies depended upon petroleum products for their mobility. Without oil, military power was nothing more than a muscle-bound, ponderous machine, formidable in appearance, but useless.

    But more importantly, those oil surpluses from the 1930s quickly disappeared once war broke out. Six billion of the seven billion barrels of petroleum used by the US and our allies during the war came from the United States alone. Public officials again began to worry that the United States would soon run out of oil. It seemed important for the US secure access to foreign oil reserves. So after the end of hostilities, the US began to increase its presence in the Middle East, especially as American demands for oil rapidly grew and and looked to be outstripping domestic supply.

    I believe the history of WWII is important in understanding peak oil. To paraphrase what Coolidge said ... our supremacy will be determined by the amount of available petroleum we are able to control. And during WWII, our success in denying both Japan and Germany access to oil and its products was a major factor in determining the outcome. And that's the issue with peak oil.

    If we are to maintain our leadership/supremacy in the world, the amount of oil we control will be vital to our success. Any nation's attempt to challenge our supremacy, will depend on their ability to control more oil than what our reserves hold. So the key to defeating the US will be by the having enough oil reserves to match ours while denying our ability to extract our known reserves or engaging in attacks that require massive amounts of oil in order to deplete our reserves simply by attrtrion and hope their reserves can outlast ours.

    So as a matter of foriegn oil policy, I suspect it has been in the US's best interest to steer domestic demand for oil to foreign markets so as to deplete other known oil reserves while keeping US reserves intact. In fact, the more oil we consume off the global markets, the less chance there will be for another nation to contemplate challenging our supremacy. In the meantime, I suspect our real oil reserve capacity is far more than what's publicly known. It wouldn't make much sense to advertise to the world how much oil we hold in reserve ... that would be like playing a game of high stakes poker and letting everyone know in advance what cards you're holding.

    But here's the interesting political twist. There are numerous GOPer candidates pratically shouting Palin's line from 2008 ... Drill, Baby, Drill. And with the ability of annonmous political donations of umpteenth billions of $$$, it would be possible for a foreign entity to steer an election towards a candidate ready, willing and able to open those unknown oil reserves, thus changing the dynamics of US supremacy in future conflicts.

     

     

    Oil Strategy in World War II

    http://www.oil150.com/essays/2007/08/oil-strategy-in-world-war-ii

    Comments

    Speaking of oil strategy, the initial British action in World War One was to invade Fao, then Basra to secure Mesopotamian (Iraqi) oil fields from the Ottoman Turks and Germans.

    Peak Oil has been an evolving issue. Most depletion gurus predicted that global demand would raise prices and cause an oil shock, but none that I saw anticipated that global recession would dampen the price spike. 

    I'll be interested to hear what the gurus say at ASPO USA next week.


    by Donal on Sun, 10/23/2011 - 2:29pm

    Donal, you got my curiosity up on peak oil and I appreciate the push.

    While peak oil is an issue for the global public, my surprise was it's a vital weapon in the arsenal of conquest at the national level.

    For example, with all the recent software attacks ... stuxnet ... there is a growing concern of an attack that would cripple the electrical grids and shutdown vital refineries. Without refined oil, our military industrial complex as well as our military forces would only be able to operate for a limited amount of time before they had to shutdown because of the lack of energy to fuel production or carry out a strategic mission. Does the term Shock and Awe ring a bell?

    Also, many people put down the F-22 Raptor, however a squadron of them could easily take an adversary air force out in a heartbeat. That tells me the DoD is looking to do as much damage as possible within the first few minutes to bring hostilities to a halt before it gets rolling allowing us time to regroup and lockdown what we have available throwing everything we have at the oppoent before they can regroup and counter attack.

    That tells me peak oil is real but the key is how much a nation has available to defend itself from a hostile adversary.

    One last thing is Afghanistan. Since it's a landlocked country, the US had no choice but to make peace with the military junta that overthrew an elected President. We need their ports and roads to transport necessary fuel supplies for our humvees, tanks, and jet aircraft ... we weren't going to get any support from Iran or Russia.

    So oil is far more important from a strategic standpoint than it is for the average consumer at the gas pump and its availability is more dependent on national defensive interest than the public right to inexpensive fuel.

    I see it all in a different light now.


    by Beetlejuice on Sun, 10/23/2011 - 3:35pm

    You might find this interesting, too.

    Oil and the Economy by Chris Martenson

    When I have the opportunity to present to and interact with people who are one the economic/financial side of the equation, they very rarely understand - truly understand - the energy side of the equation. You know, the not-so-subtle difference between total energy and net energy, and the fact that the first and second laws of thermodynamics have never been broken.

    And in reverse, I often find that people in the energy camp do not really appreciate how the economy functions, and that it is really a complex system with multiple nested feedback loops predicated upon growth. In my view, each camp would benefit from spending a little bit more time in the other camp because both are really making some very profound assumptions.

    The economic folks are assuming that energy will somehow be found and brought to market and the energy folks are assuming that the economy will be there to support their capital and technology-intensive efforts. Neither of these assumptions are very helpful if they help us overlook the potential disruption that declining net energy could unleash within our economy.


    by Donal on Mon, 10/24/2011 - 8:11pm

     

    You really should check out Daniel Yergin's masterpiece: The Prize

    http://en.wikipedia.org/wiki/The_Prize:_The_Epic_Quest_for_Oil,_Money,_a...

    What is really interesting about today is that now we protect the entire global oil market, rather than simply our strategic interests. Or perhaps somehow our strategic interests have expanded from protecting our "free world" partners (NATO, non commie countries) oil supply lines to protecting the right of every country to have access to oil.  Why we are protecting China's right to cheap energy, when they clearly have different--and competing--interests then we do is a difficult thing to understand. Our military isn't working for just our interests any more, but then again neither is our government.  Our hegemony has outgrown us.  The GOP candiates might reflect that, but I would argue the worldview of competing nation states is no longer an accurate reflection of what is going on.

    As to peak oil, we have already hit peak crude (IEA chief economist says 2006). But we got another century's worth of Shale and Tar sands, it just takes more energy/cost to get at it. $80 a barrel is simply the new baseline. 


    by Saladin on Sun, 10/23/2011 - 4:39pm

    But can we afford the environmental destruction necessary to extract kerogen and bitumen, and the water and energy necessary to turn them into synthetic oil?


    by Donal on Sun, 10/23/2011 - 5:58pm

    China plans to double coal production by 2030, without anything in the way of CCS. They are replacing dirty plants with clean ones that reduce particulates and other distasteful emmissons (no2, so2, etc.), but who gives a shit about C02.  So we are going ot hit 500ppm, and probably much more, no matter what.  The environment is going to change 

    Can we afford it? I don't know what that means. We've been an anthropocene for quite some time (at least since the 1500s). So the game continues with a whole lot less biodiversity and a shit load more risk for castrophic failure of our food systems. 

    My take, as soon as our elites made their Faustian bargin to baby the CCCP into the WTO to become the workshop of the world again we pretty much gave up controlling it.  Even if the US and Europe goes 100% EV powered by renewables the rest of the rapidly developed world will demand the oil and gladly pay the price. As to the Bitomen and Kerogen? Nobodies going to let trillions of dollars sit in the ground (well some moral South Americans might try, but greed and an utterly broke Europeans will bring them around).  We gave up control awhile ago, but who cares what I think we can afford. 


    by Saladin on Mon, 10/24/2011 - 1:35am

    Afford means, can we extract oil-like material now and do without water and arable land later.


    by Donal on Mon, 10/24/2011 - 8:13am

    Yep, still don't know what it means.  Obviously my inclination is probably yours too--no, but that is a result of my cultural upbringing.  At heart I'm a sentimental aesthetist, I don't like risky change that will make the world ugly.  But can mankind afford it, and continue on?  I don't know. I am not a soothesayer, but I would not bet against technological solutions even with the likelyhood of a few castrophic failures along the way.  But then again, I don't think that I would bet for techonlogical solutions either--but i abhore the idea of SO2 scortching the sky. 

    That said, I would put all of my money on the table that we (collectively) are going to take the gamble whether it offends me or not.  Armchair energy strategy posts like this one make me even more certain. I hope (and work towards) I am wrong in that. 


    by Saladin on Tue, 10/25/2011 - 3:59am

    Interesting look at oil and the way it drives our foreign policy and is in fact used as a weapon. There are indeed subtleties here that never quite get examined beyond an "Of course an industrialized nation wants access to oil" point of analysis. That need for oil is fundamental to the ability to "Rule Brittania" altogether, and the consequences of that are deep and comprehensive.

    It is also instructive to understand just how and why the Defense Department is so keenly in pursuit of renewable energy. It surely ain't because tree huggers have overtaken the Pentagon, although much of the PR surrounding this very expensive and intense effort would have you believe otherwise.

    Now, as clean water becomes more and more rare as a commodity in a growing world population...


    by SleepinJeezus on Sun, 10/23/2011 - 4:41pm

    Rule Brittania was the rule when Britian used their vast coal reserves to power their fleets. Once they converted to oil ... late 1880-1890 ... , it was obvious to the most casual observer Britian didn't have any oil to lay claim to so their prominence as a global naval power began to slip shortly after WWI. So a nation that doesn't have a self-sustaining source of oil pretty much has to follow the leader who has the most.

    I suspect the DoD is keenly aware if our national power grid gets knocked out, there would only be enough refine oil products to conduct a military campaign for a few days, probably a week at the most. So all their efforts has been to beef up their front line defenses so if an attack happens, their response would be quick and decisive ...shock and awe ... in a matter of hours up to a day or two before they get below 50%. Because once attacked it opens the possibility of another nation waiting on the sidelines to take a shot hoping to catch us off-guard and too low on oil resources to mount a counter offensive.


    by Beetlejuice on Sun, 10/23/2011 - 5:12pm

    They didn't convert their fleets to oil until after the turn of the century, mostly circa WW1 and into the 20's, under the then first lord of admiralty Winston Churchill.


    by Saladin on Mon, 10/24/2011 - 1:48am

    I think this coal to oil transition is an important point. Holding onto reserves of oil now would be like holding onto reserves of coal in the 1860s or so. If you wait too long to cash in those reserves, their value actually start to drop, in this case as we develop alternative energy sources in earnest (out of necessity, which is why I'm not expecting it to happen quite yet).


    by Verified Atheist on Mon, 10/24/2011 - 8:41am

    I don't have the data handy, but I would also bet that you are wrong about the drop in coal prices.  Coal was still worth alot even with the advent of oil. Its worth having now, even if its the cheapest cheap fuel source (ask the koch bros). I am sure they dropped circa 1873, becuase everything worldwide dropped during the first great depression, but I doubt they were a worse store of value then anything else, which your post seems to suggest. 

    But regardless of what energy commodity prices were back in the day of expensive transport networks we live in a globalized world now. If we don't buy the oil, someone else will. The "developing world" does not have the luxury of theortical EV fleets but they still have large economies now which are powered by internal combustion engines. And they don't give a shit that we don't factor their demand into our thinking. 

     


    by Saladin on Tue, 10/25/2011 - 4:14am

    I get the idea of control of energy as a weapon. After all, what else could that secret Cheney meeting (back in the day) have been about about but scarcity as a stick and money as a carrot to support imperial adventures.

    But the combat scenario you depict overlooks the availabilty of nuclear weapons to turn resource "seige" warfare into something else pretty darn quick.

    I think any resource war model has to accept the "four generations" idea of tactics brought about by developments in technology. The Defense Department is training their leaders in those tactics. The U.S. has got all the shock and awe they need if a fight gets large enough.

    I agree about the unadvertised oil reserves.


    by moat on Sun, 10/23/2011 - 8:23pm

    I think it is a mistake to believe that the U.S. has any significant reserves which are known but the existence of which is being kept secret. Almost every single person who stands to make a buck or two on oil, or a billion of them, wants it now. They know they can't take it with them and they do not think about leaving one potential nickel underground for someone else's future.

     Also, standard conspiracy theory problems come into play. Too many people would know of the existance of those oil fields to keep knowledge of them under wraps.


    by A Guy Called LULU on Sun, 10/23/2011 - 9:29pm

    I wasn't thinking of oil fields, more of lots of little stashes of refined products stored here and there.

    But your point about the limits of information control is well taken.


    by moat on Sun, 10/23/2011 - 9:40pm