What's Hiding Behind
The Big Dirty Chimney?
Author: Kris Zurek
Trainee of SEED – Sustainable Education Environmental Development
Funded by the Waterford Institute of Technology
& Independent Health Educator
"Throughout history, people have had difficulty
in distinguishing reality from illusion.
Reality is what happens, whereas illusion is
what we would like to happen."
-from Middle East Oil - Reality and Illusion by C.J.Campbell
What have deepened author's understanding of world oil and gas politics was a calamity of Twin Towers on the 11th of September 2001. Since that time it become more and more clear that some people in power will not rest till they will achieve their goals at any costs. One of the goals is to take control over the last remaining oil/gas supplies in the whole world. In 2002, the issue of Peak Oil/Gas and its connection with the invasion of Afganistan was brought to the attention of the author by Mike Ruppert and his US team of investigators. *11
Since 2002 uptill now many more experts all over the globe joined awareness campaign to highlight the dawn of Peak Oil.
What does the term Peak Oil mean?
"Peak Oil" is the point at which half the total oil known to have existed in a field or a country has been consumed, beyond which extraction goes into irreversible decline
Modern civilization has never experienced the phenomenon of peak oil before, therefore you could say that we are walking in the dark, not knowing fully what to expect. The signs of imminent crash might not be fully and immediately recognized by untrained eye, but let us have a look at different clues.
Forecasts presented by USGS geologist Les Magoon, the Oil and Gas Journal, and others expect the peak will occur between 2003 and 2020. *1 If that is true, world might be already peaking, without majority’s knowledge.
More and more information streams forth, to such a degree that, even National Geographic took notice of that. June 2004 issue covered the subject of "The End of Cheap Oil".
Further, according to Bill Powers, editor of the Canadian Energy Viewpoint investment journal, there is a growing belief among geologists who study world oil supply that production "is soon headed into an irreversible decline ... The US government does not want to admit the reality of the situation. Dr Campbell's thesis, and those of others like him, are becoming the mainstream." *2
Some eminent political figures in other countries admit more openly to the problem. Australia's Deputy Prime Minister John Anderson believes high fuel prices reflect the inevitable decline in the world's oil and gas reserves. *10
While Dominque de Villepin, French Prime Minister said recently "We have entered the post-oil era. I want to draw all the consequences of this and give a real impulse to energy savings and to the use of renewable energies." *8 Nicely said, but maybe too little and too late.
The predictions of demand of oil and gas clearly show challenging trend. If world demand continues to grow at 2% a year, then almost 160 million barrels a day will need to be extracted in 2035, twice as much as today. That, say most geologists is almost inconceivable. According to industry consultants IHS Energy, 90% of all known reserves are now in production. *3
A Morgan Stanley Commodities Outlook confirmed the same in its predicting rapport. It said, that even if demand moderates to 1.5% per annum, as it hopes, because of oil depletion of 5%, there is a need for the discovery of extra 28 million barrels per day of new oil. Report commented that this is unlikely. *9
Even OPEC admits that it has reached its production limit, and trying to stretch output by one million barrels per day isn't likely to lower oil prices, Algeria's minister for energy and mines said.
Sadad al-Husseini, former vice-president of Saudi Arabia's national oil company Aramco said : "I think in total the outlook is much too high for production and it’s unrealistic for the world to be expecting such high numbers from all of the producers, including Saudi Arabia. They’re not only overestimating the Middle East, but they overestimate non-Opec, they overestimate Russia, they overestimate the whole global resource base. And I think this is a rather dangerous situation for the US government policy to be based on."*4
The gap between oil extraction and consumption is getting bigger every day. In fact, we reached point of no turning back, but still some people behave like the reserves would last for another 30 years. Considering the fact that China consumes now even more oil then main oil/gas consumer, USA, we will have to prepare to face consequences of not being able to keep up with the rapidly growing demand of these and other countries. The ASPO graph below shows that vividly.
(3 year average - past and projected) 1930-2050
Deutsche Bank gives credit to ASPO
While referring to ASPO, German Bank stated : "The end-of-the-fossil-hydrocarbons scenario is not therefore a doom-and-gloom picture painted by pessimistic end-of-the world prophets, but a view of scarcity in the coming years and decades that must be taken seriously. "
Major oil finds (of over 500m barrels) peaked in 1964. In 2000, there were thirteen such discoveries, in 2001 six, in 2002 two and in 2003 none ! *5
Fifty years ago, the world was consuming 4 billion (4,000,000,000) barrels of oil per year and the average discovery was around 30 billion per year. Today we consume 30 billion barrels per year and the discovery rate is approaching 4 billion barrels of crude per year. *6
According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide. "We should be worried. Time is short and we are not even at the point where we admit we have a problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the peak, which I think is 2008, is tomorrow in planning terms."
Dr. Colin Campbell and the Uppsala Hydrocarbon Depletion Study Group have now made the 2004 upgrade of the peak oil model. The peak is moved from 2010 to 2008
Colin Campbell, helped to found the London-based Oil Depletion Analysis Centre. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries.
Dr. Campbell - Founder of ASPO
Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year (2006). His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works.
"About 944 bn barrels of oil has so far been extracted, some 764 bn remains extractable in known fields, or reserves, and a further 142 bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.
If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."
According to Campbell, companies seldom report their true findings for commercial reasons, and governments - which own 90% of the reserves - often lie. Companies, says Campbell, "under-report their new discoveries to comply with strict US stock exchange rules, but then revise them upwards over time", partly to boost their share prices with "good news" results. "I do not think that I ever told the truth about the size of a prospect. That was not the game we were in," he says. "As we were competing for funds with other subsidiaries around the world, we had to exaggerate."
In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from "if" there is a global peak to "when".
The US government knows that conventional oil is running out fast. According to a report on oil shales and unconventional oil supplies prepared by the US office of petroleum reserves last year, "world oil reserves are being depleted three times as fast as they are being discovered.
2005-05-04: Legendary Oklahoma energy magnate, T. Boone Pickens: "Let me tell you some facts the way I see it. Global oil production is 84 million barrels a day. I don't believe you can get it any more than 84 million barrels. I don't care what Abdullah, Putin or anybody else says about oil reserves or production. I think they are on decline in the biggest oil fields in the world today and I know what's it like once you turn the corner and start declining, it's a tread mill that you just can't keep up with.”
Author hopes that more and more people will wake up from the deep sleep. It is difficult not to take a notice when even people of such caliber as Matthew Simmons  start to speak out openly without fear of ridicule. Matthew Simmons is a Chairman and CEO of Simmons & Co. International, one of the worlds largest energy investment banking firms. He already has realised that the future of his bank is blank. On many occasions, he expressed a deep concern for the urgent need to take measures to prevent that the decline shall destroy our society. He refers to the word ”crisis” as: A temporary problem that has been left unattended so long that it has become permanent !
Whether we still have some time to mend the hole in global economy and energy production, or not, is not the focus of this short article. What is more clear though is the fact that, humanity will need to be prepared to face the truth, to be fully motivated in order to do something and minimise fast approaching shock wave.
And are we truly prepared to embrace bigger picture? How many of us truly realise that global economy, national security, and all of the military activities have a lot in common. How many of us are willing to understand that the so-called War On Terrorism is nothing more but a smokescreen for War for Survival of the Oil/Gas Empire. How many of us dare to think that we might be even deceived by the authorities in our own countries, that secretly support such wars and ensure that media is keeping this facts under the lid.
In the now famous documentary "Fahrenheit 911" and soon to be famous "Peak Oil Imposed By Nature" some clues are provided. In the former, investigative reporter Michael C.Ruppert is expressing his views on the fact that Dr.Campbell, (mentioned before in the article) was approached in his own village, in Western Ireland by US intelligence. Ruppert claims that what the CIA most of all wants to know is; ”how close is the ASPO to penetrating the public consciousness with the issues of PEAK OIL and how close is the public to acknowledging what it’s going to mean”. According to Ruppert the so-called ”war on terrorism” is nothing but a war to control the last remaining oil reserves of the planet.
The Ruling Elite - Shodow Government is fully aware of the Peak Oil phenomenon. They not only do not ignore it, but act on it. The ruthless military campaigns in Afghanistan and Iraq are the living proof of it. The time before oil ends and with it life as we get to know it, is moving fast, so too, are their actions.
Information from 2005 Bilderberg secret conference
The oil industry at the 2005 Bilderberg conference was represented by John Browne, BP´s chief executive officer; John Kerr, director Royal Dutch Shell; Peter D. Sutherland, BP chairman and Jeroen van der Veer, chairman of the Committee of Managing Directors of Royal Dutch Shell.
At Rottach-Egern, in May 2005, industry's top executives tried to figure out how to keep the truth about diminishing oil reserves from reaching the public. Public knowledge of the diminishing reserves directly translates into lower share prices, which could destroy financial markets, leading to a collapse of the world economy.”
In summary, growing number of researchers think the peak in global oil production could be reached some time between now and 2008, others that it will come between 2010 and 2020, but most agree it is within the next decade or so. It is no longer the question "IF", but "WHEN". Perhaps one will never be able to exactly pinpoint the month and the year of the Peak. Perhaps it is not a Peak sensu stricto, but a plateau of one, two or three years. Nevertheless, we can be certain about one think, once its reached, civilization has nothing to climb, and the only road is downhill, into global recession.
"... High prices might be an early indication of a supply-demand imbalance that can only be reconciled by still higher prices (recession or global slowdown notwithstanding). In that case, a more comprehensive oil shock surely awaits and that is with conventional oil production holding steady. Sooner or later, production levels will start to decline..." wrote Financial Times *7
In the most recent article of the Irish magazine, it has been mentioned that in 2005 April meeting, the merchant bank Goldman Sachs warned that a "super-spike" in oil prices might drive the cost of the barrel of crude up staggering 105$. That would be twice the price of year 2005 and six times the average price between 1987 and 2000. The bank referred to the "spike" because prices could not stay at the $100 level for more than a few months without causing the collapse of the world economy. In such a scenario companies all over the world would cancel expansion projects, millions of people would become unemployed and cut their spending to the bare minimum, causing other people to lose their jobs too. On top of that rationing coupons for most sought after commodities would be issued. Recession would settle down. *12 One could try to be optimistic and say that Recessions come and go, like the one, which started in 1929. Unfortunately this coming recession is much different, more penetrating and longer lasting. Economical expansion is dependent on energy and energy is not inexhaustible. All signs show that although we are still sitting at the dinner table, main course is already eaten and what's left is not so sweet desert.
The first stirrings of peak oil reality are starting to trickle in. Not surprisingly, most of these reports come from the poorer parts of the world where already high prices of oil are simply too much for fragile economies.
Here are a few of the items:
- Recently the BBC reported that dozens were killed in fuel riots across Yemen when the government withdrew subsidies resulting in dramatic price increases.
- All across Indonesia people were lining up at gas stations in response to developing fuel shortages. In one city, half the public transport was inoperable due to a lack of fuel.
- In Zimbabwe, the government has moved to deregulate fuel procurement in the face of severe shortages: waits of hours for buses, gas lines that are blocks long, and a bread shortage. The black market price for gasoline is now ten times the official rate.
- Nearly all the poorer countries make their electricity using diesel generators. Nicaragua, one of the poorest countries in Central America, recently started blacking out the poorer districts between 7 and 10 p.m., the hours of peak usage.
- Tanzania, with the highest gasoline taxes in East Africa and a chaotic oil marketing system, is seeing its plans for economic growth "suffocated" by high-priced oil. Tanzania also handles fuel for the landlocked states of Malawi, Rwanda, the Eastern Congo, Burundi and Uganda. (Source: ASPO Ireland)
And closer to home, -
Maxjet put off plans to offer cheap flights from Baltimore to London until spring when the company hopes fuel prices will be cheaper.
- In Ireland Gas went up by 25% and to fill up an oil tank for heating, which used to cost 400 it now costs 600 Euro
It is also worth mentioning that as early as 16th August 2003, 57 million people! in USA were left without electricity for few days. How one could ignore such direct message? Yet people did not get the lesson. Life continued after like nothing has happened.
But we should not be too surprised, because Oil is to a society as alcohol is to an alcoholic. Addiction is strong
... Sadly, we’re going to have to wake up in our own "vomit" before we start any process of a real substantial move away from oil. Withdrawal symptoms will most likely be visible on a massive scale, when humanity will be left without its "daily bread" - Oil and Gas.
What type of human activity is the biggest contributor to the accelerated depletion of oil reserves?
70 percent of oil is used in the transportation sector
A recent report from the Environmental Protection Agency said cars and trucks sold today are much less fuel-efficient than they were in the late 1980s.
Ref.:
- 1), 2)The end of oil is closer than you think. Reports John Vidal. The Guardian Thursday April 21, 2005
- 4) Channel 4, 26 October 2004
- 5)Guardian, 8 June 2004
- 6) An oil supply tsunami alert Asia, 4 May 2005
- 7) The world is heading for a shock over the high price of oil Financial Times, 16 August 2005
- 8)France promises aid to households over oil price Reuters, 1 September 2005
- 9) Fossil fuels are not yet extinct, says Shell Sunday Herald, 11 July 2005
- 10) Anderson fears for oil reserves Australian Broadcasting Corporation, 20 May 2005
- 11) www.fromthewilderness.com
- 12) "The End Of Oil and the Irish Economy" by Douthwaite; Construct Ireland issue 10, vol 2, August 2005
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