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Do they have a 'responsibility' to supply us?
Posted by Jerome a Paris on May 10, 2007 - 5:40pm in The Oil Drum: Europe
Politics of oil seen as threat to supplies
Increasing state ownership and rising resource nationalism are emerging as the main long-term threats to global oil supplies, says a report for the industry by an energy consultancy.
(...)
Resource nationalism, which is limiting access for international oil companies, and the national oil companies’ failure to reinvest profits in production, are limiting outlay required to replace existing resources, which are being substantially depleted.
Easy profits herald global oil crunch
Key national oil companies are not making the needed investment, either because resource nationalism is leading them to block out technologically advanced international oil companies or because they are making so much money from current fields that they do not see the need to reinvest.
(...)
“The real challenge is *whether the national oil companies will meet their responsibility to bring the oil to market* ,”he says.
It is unclear whether that responsibility is as important to those countries as meeting their needs at home.
Their responsibility? Their responsibility? As in a duty? As in a duty to supply us our fix? As in an imperative obligation to supply us before they supply their own needs?
In what kind of world is the seller under any obligation to sell? On what markets do sellers have a responsibility to provided their goods to buyers unless they want to (presumably because they find it a good opportunity for themselves to sell)? Oh yes, in a world where we are entitled to the resources of the whole planet without any restriction - and entitled to consume them, burn them, deplete them when we want and in the quantities we want. If that entails riding roughshod over reticent governments, isolating, demonizing or toppling them, or even waging war on them, so be it. They failed their responsibility to provide us their oil.
Gah. We get the warning signs from all over the place. Peak oil is, in the most optimistic estimates, less than a couple decades away (i.e. less than one generation of infrastructure away). Production capacity constraints, whatever the reason, seem most likely to come a long time before that - and can indeed be argued to have started already. We thus need to work on the assumption that we can no longer count on the supply side to balance the markets. Thus, instead of pestering ungrateful national oil companies for cashing in on their good luck (and for behaving perfectly sensibly in managing their resource base with a longer term perspective), we need to work on what we actually control: our demand. How hard is that to understand?
And it's not like it would be so hard. We waste so much energy that reducing our consumption should not have any noticeable impact on our quality of life - in fact, in all likelihood, it should increase it, as we do with less pollution, less traffic, less wasted time, less military spending, less involvement with seedy regimes, less resentment around the world at our greedy ways, etc... not to mention the samll matter of global warming. But no, it's sooo much easier to blame the nasty, stupid nationalists, communists, terrorists or assorted incompetents (I mean, Arabs, Iranians, Russians or Venezuelans, in no particular order).
Irresponsible bastards. What is OUR oil doing under YOUR deserts/toundra? Or, should it be - why are we whining or throwing tantrums instead of acting on what we can? Why should the spoiled kids dictate the terms?
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I sent the FT the letter below. I don't know whether they will publish it though:
Of course they have no responsibility to sell us oil. The simple asking of the question, however, tells me that we are very close to admitting that we are not as civilized as we think we are.
Wars have been waged for resources in the past, and I see no reason why it should be any different now. Some folks need to get a grip on reality. If someone has something you need desperately enough, and they are unwilling to trade for it, then the only recourse left is to try to take it. That's not unique to this country or this century. It's the way we are, bleeding hearts notwithstanding.
Say howdy to your reptile brain.
HOWDY!!!
KTA&TTG!
YCHSOMG,RN,AIFIYF.
qwerty!!!!
The countries with oil have no responsibility to supply other countries with oil, just as the countries with advanced pharmaceuticals have no responsibility to supply other countries with medicines.
I don't see any added value in the association you are trying to make. Yes it is true that in a free market nobody has the responsibility to deliver (unless by a binding contract), including the pharmaceutical companies. This is the foundation of our market economy.
But it may argued that it is in the common good of both sides for the pharmaceutical companies to deliver. While it is not at all certain that it is in the long-term good of oil suppliers to squander their resources as fast as they can.
What we are witnessing is a clear case of one of the sides in market relationship trying to exert unfair and contradicting to the basic market principles power over the other side. If this was happening within US or within any developed country there would be a series of lawsuits costing billions for the offenders. But since this is happening in the international arena, where some are "more equal" than the others they are able to get away with it.
Jerome's article is spot on, and is drawing the attention to a problem which will become increasingly acute in the years to come. The most destructive way PO may lead us to would be confrontation between oil consumers and suppliers.
Hello LevinK,
I echo your ending quote:
"Jerome's article is spot on, and is drawing the attention to a problem which will become increasingly acute in the years to come. The most destructive way PO may lead us to would be confrontation between oil consumers and suppliers."
Sounds like the original Financial Times article is propaganda to induce us towards the '3 Days of the Condor' scenario. I hope we will have the attained sufficient Peakoil Outreach wisdom to practice ELP and some version of the ASPO Energy Depletion Protocols instead.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Personally I don't believe in any significant mitigation efforts before the crisis has arrived. Even then the response will not be ELP or coordinated conservation effort, but more like "everybody taking care of himself" :)
Oh, but let's not pretend we can't see the point just because we don't like the way it was stated (or because we delude ourselves about pharmaceuticals, most of which are used to pretend to treat old age, something we don't really have a reciprocal stake in.)
The bottom line is that most OPEC countries have nothing - zero, zilch, zip, nada - in the way of an economy except oil. That's why they've been twitchy about actually killing the golden goose in the past.
In the last few years they've gotten away with something and seem tempted to push until the world economy breaks. Very well, they may succeed. But let's not forget that it's a co-dependency, a two-way street. No oil out, nothing in trade back in, collapse, as they produce nothing themselves. Consuming countries are not the only ones in for a shock.
How does this preclude responsibility for the oil-exporting countries to manage their oil wealth the way we, the consumers want?
And I don't even want to enter in the argument that much of the reasons oil producing countries are ranking high in the misery rank-list are lying in the policy of the rich ones towards them. If they had any choices other than exporting oil, would they be wasting it for 10c a cup?
Oh, on that part of the point, you're right - as with most business transactions, the trade will go forward, or not, insofar as both parties see it as being in their interest, or not. The gross negligence by most OPEC countries of their own economic development simply disconnects 'responsibility' from the discussion by rendering it irrelevant.
Edit: on second thought, maybe the OPEC governments do have some responsibility to their own people. Most have done utterly poorly at that. And those responsibilities will involve trade, because (1) autarky doesn't work well anyway, and (2) their past negligence has foreclosed other alternatives for the short to medium term.
Aside from the apples and oranges point, there is no way the US is going to accept the deal implied here. The world can survive on generics -- but there is no generic substitute for oil.
Too late. This is what is already happening. And it is going to get a lot worse by all indications. That the empire will lose eventually is quite certain. How much devastation it will rain on the world is what's unknown. It's much too much to hope that it will collapse the way the "evil empire" did, with a minimum of violence.
We are entitled to infinite amounts of cheap energy: http://en.wikipedia.org/wiki/Image:JabbatheHuttROTJ.jpg
The international oil companies can do something: Use their substantial lobbying power to pressure the US president and Congress into enforcing the Carter doctrine. The US has already begun using its military power to secure access to oil. If you read between the lines, the article makes the point that the next logical step is military action.
So, perhaps these oil companies could convince the US government (mainly prez bush and vice prez Cheney) to get us involved in another conflict over oil. Who pays the tab?
US is currently in debt for over $8.5 TRILLION and a forth of that is held by foreign powers. So what country or PTB will buy trillions more treasury notes to allow for more "oil conquests"?
The US has already stepped into the quick sand with Iraq. Being involved in one more conflict over oil would send the dollar plunging and the economy would be hammered by inflation and extremely high interest rates as the debt piles up by an additional $100-200 billion per year.
And lastly, where would we find the military personnel to do the fighting? Want to see a replay of the Vietnam era protests and riots? Just reimpose the draft for another oil war. I can see blood flowing in US streets even before the first bodies arrive home.
I've just been reading up on what Thailand is doing in response to roughly doubling of it's energy import costs -have a look:
http://www.boi.go.th/english/why/Alternative_Energy.pdf
Rather than whinging on that exporting nations should 'give them more' they create home grown solutions. If this is the sort of forward thinking we can expect when the market signals 'tougher times ahead' via higher prices I say bring it on and ASAP.
I've just written an email to www.nanosolar.com -it would be great to see them set up a manufacturing plant in Thailand (as well as US and Germany) to supply the Asian Market and they would get bargain tax breaks to boot...
Nick.
This is a terrific link, and another reason why the world can transition past Peak Demand, if oil stays above $60 a barrel. Especially note the section on biogas.
In 10 years, worldwide, the majority of farms will be using waste for energy (if oil stays up). Animal dung is big. Jatropha farms will be huge (especially if selective breeding increases yields).
Add new biofuels to plug-in hybrids, and what you see the world past Peak Demand. OPEC leaders recently have been wondering who can they sell their oil to in 10 years. Wonder well they should.
No discussion of fossil crude is complete without recognizing the role of price on demand. It is not inelastic. The role of price on supply is delayed for a decade, but on demand maybe five years or less.
There are real, perhaps intractable problems in the world, usually involving human behavior. How does one end wars, or solve the urban crime problem? These are problems.
Technical problems almost always get solved, even one where there are constraints. But energy is a fun one, as the solutions are so diverse. Any new source of supply, or any form of conservation, is part of the solution.
Cars can not only be lighter, they can be hybrids or plug-ins. They can run of bio-diesel, or ethanol. Animal dung need no longer be released into the air as methane, if can be turned into energy.
The Indians will be driving Tatas by the hundreds of thousands - but what if they are plug-ins, and India builds nukes? And India moves to a 20 percent biomix diesel (as they plan to)? Then what happens to fossil crude demand?
Yeah then what happens? Can you makesome calculations, like what would the surface needed be to grow that? What's the energy input needed to get energy out of pig dung (inlcuding the produciton of the hardware installation)? Like what amounts of liquid fuels that will be produced?
Like how many, and how fast there will be cars (say hybrids) that influence the MPG at what time? How fast in your model does the MPG increase over time? How does recession/increased growth play out the next 10-20 years?
You are full of optimism, thats good, but will your solutions come fast enough, in large enough style?
Get us some proposals with figures and timelines and realism before you post next time, dude.
Go for it!! Cheers.
There are massive shortages of electricity in India. Outside of Bombay - now known as Mumbai - there is not a single city in India that gets electricity for 24 hours a day. In most cities (including the capital New Delhi), there is "load-shedding" of 2 to 6 hours a day. In villages that are connected to the grid, power may be available for only 6 to 8 hours a day. So there is no way the Indian grid can handle a significant number of electric vehicles.
Secondly, the Tatas make cheap cars. Plug-ins will be too expensive for most Indian car-owning households.
If India were to build all the nuclear power plants that they are planning to build, the percentage of electricity generated from nuclear energy will increase from 3% to 5%.
As far as Jatropha based bio-diesel is concerned, it remains a promise, not an accomplished fact.
Economists (much reviled on these pages) would tell you the mechanism that allows the market to sort everything out is the price signal. High prices will supposedly spur new investment and all will be well.
Of course many here would deride that opinion because you can't pump what isn't there, no matter how much you invest.
But that doesn't mean that high prices won't stimulate any positive developments. For one thing, high prices will stimulate the introduction of more fuel efficient cars. And if they are high enough for long enough the result will be a more fuel efficent fleet.
Of course some on these pages (if they notice my post at all) will complain that this can't possibly happen fast enough to make a difference, so it is irrelevent, and we should just start breeding horses now.
But come on. Maybe $60 oil won't result in the rapid introduction of lightweight plug-in serial hybrids. But how about $100 oil. Or $200 oil. Or $300? If you believe that we are post-peak and about to experience a rapid decline, then you must by definition believe that we will soon see shockingly high prices. In which case it logically follows that will be a shockingly fast move to improve fuel economy.
Alternatively, if you think prices will not go up dramatically any time soon, doesn't that imply that we do still have time to make significant improvements in efficiency?
The implication, to my way of thinking, is that the sooner prices go up, the better - it will spur the efficiency gains we so badly need to work on. And the less the national oil companies invest in infrastructure, the sooner high prices arrive.
So the biggest favour Russia and Venezuela can do for the world is to put all capacity and maintenance programs on the back burner and "go slow" with their production, in order to spur changes amongst their consumers. A little pain now is better than trauma later down the road.
If we are to believe in things we cannot see or touch, how do we tell the true belief from the false belief?
The bigger the threat, the bigger the response.
It's as easy to extrapolate an exponential decline far enough into the future to see 'The end of civilisation' as it is to extrapolate an exponential increase and get to 'Death Star sized space structures'. Doesn't mean either will happen.
Digression: Most people think the 2nd world war started in 1939 but the really big fighting didn't get going till mid 1941. Stalin packed up and moved a good chunk of Russias Manufacturing capacity in Response to Barborossa. Germany didn't even declare Total War till Feb. 1943. Just look back at what was achieved in terms of output during wartime and you realize that humans can move mountains if needed. This is something that the 'Nintendo Generation' mostly don't have a clue about but I can't see them sitting back and crying into their last can of diet coke as the lights gradually go out on planet earth...
Nick.
Regarding WWII - actually probably started earlier than that. Same as Vietnam. Most think it started in '63 or thereabouts. I was there in '59. Getting shot at, and shooting back. And not as a "civilian".
Determining the start and finish of any war is very difficult. Imo, they just move to different arena's with short little breaks in between that we call "peace".
Ah, the smell of fear, or at least the beginnings of it. Reality is appearing on the FT's horizon.
I've put it this way: You can have either the 100 largest financial institutions or the 100 largest oil fields, but not both.
What would the value of the 100 largest financial institutions be without the 100 largest oil fields? (Note that at least until recently, the two largest producing fields, now in decline, accounted for 10% of world crude oil production.)
What would the value of the 100 largest oil fields be without the 100 largest financial institutions?
Banking was here centuries before petroleum was a product and will be here centuries after we stop using it.
Certainly. But back then what percentage of the banking portfolio was devoted to automobiles getting less than 15MPG? Or detached single family dwellings in suburban tracts? Or the production of either of these two items? The slow motion banking collapse in front of us is going to be interesting to see.
Hi td
So you think banking is here to stay?
I have my doubts. Banking is ultimately dependant on reaping interest in real terms. By definition, real growth in the real economy must occur so that more money can be loaned to pay the interest on prior loans. ("Tomorrow's growth is collateral for today's debt" as Colin Campbell succinctly puts it).
Historical experience to date has been that economic growth has paralleled growth in energy production. Aggregate increasing economic activity requires inceasing energy input (not necessarily oil). This does not seem controversial or difficult to understand IMO.
In the 70's-80's, we did experence a brief run of growth with decreasing energy consumption. Efficiency obviously improved over this time. But can efficiency gains grow exponetially? Thermodynamically we know full well it can't.
I'd expect that once
*we begin riding down the back-side of Hubbert's peak in ernest,
*all the impoverished players are long out of the game,
*all the low-hanging efficiency fruit has been reaped
*the inertia of the current order is overcome
Then irreversible economic decline will get underway, and we should see the end of growth, interest and functioning capitalism, for starters.
Like all other business ventures banking has experienced boom and bust cycles. American banks haven't experienced a serious bust since 1930. The level of economic activity in the 1940s was unimaginable ten years earlier. The Hirsch Gap will be a time of prolonged bust but as the many forms of solar energy are implemented economic growth will resume. The amount of economic activity that solar energy could provide is 100s of times more than existing levels. Given enough energy and human ingenuity all other resource restraints can be overcome.
http://www.time.com/time/world/article/0,8599,1619213,00.html
Iraqi Lawmakers Draft Timetable Bill
Thursday, May. 10, 2007 By AP/QASSIM ABDUL-ZAHRA
Excerpt:
Super. I hope we do get all our guys out. Then we can nuke the joint and be done with it.
Been there. Done that. Here's what's really gonna happen.
I have proposed the formation of a "Neocon Brigade" consisting of pundits and armchair warriors who are still in favor of sending someone else's kids to Iraq.
The Neocon Brigade would be used to cover the withdrawal of US troops.
I like that. They should be armed accordingly: with armchairs, microphones, and laptops. I'd be interested in how many seconds their expected survival time on the battlefield would be.
Good idea! But I seriously belive that a lot of theose people are already fully engaged in orchestrating the PsyOps (regarding oil/Iraq) mediated by MSM.
Do they really need nuclear reactors?
So let's get this straight. You invade a weak and inoffensive nation already prostrate from prior military defeat, which you already controlled economically through sanctions, and whose citizens you had starved in their hundreds of thousands ... and you invade on an excuse even weaker than that used by the Germans to invade Poland (the Germans at least faked an actual attack on themselves - who is going to buy 'They might have attacked us one day!'?), and then you get completely thrashed by predictable resistance, and it's therefore time not just to go home, but to go home and 'nuke the joint'. You lose a war that you started without any reason at all, and it's time to nuke a bunch of people who were just minding their own business before you all succumbed to ridiculous fantasies about your own nation?
Face it. The US has the military glory and effectiveness of Mussolini's Italy. You bit off more than you could chew, i.e. an impoverished third world nation. It's entirely your own damn fault and no nuking of anyone is called for ... except, maybe, of the US of A.
"Saudi Arabia is also limiting capacity expansion because of a self imposed cap" FT quote.
What? Where did the FT get this idea? KSA has increased their rig count dramatically, started building more oil refineries and processing facilities, and are planning to exploit their huge natural gas reserves by building gas liquification plants so it can be exported.
Do these actions by KSA sound like a self imposed cap?
The only limiting the major oil exporters will be doing in the future is amount of dollars they will accept in trade. Many will require payment for oil in stable and higher valued currency like the euro and the ruble.
How many journalists do you think know that official OPEC reserve numbers are bullcrap, have been bullcrap ever since production quotas got tied to reserve numbers, and that the problem gets worse every year.
A public company cannot claim to have oil they don't have. To do so is securities fraud, and the consequences can be nasty. Government owned companies on the other hand can claim whatever they want to.
Its amazing. By this logic, if a woman refuses to sell us her body we are entitled to rape and kill her.
Many of my ancestors were Mennonites, Anabaptists from Switzerland who went to Lancaster County, Pennsylvania in the 1750's fleeing the draft for religeous wars. They believed that living a simple life would help them get closer to their God, and that worship of the state is a form of idolitry. There life and world view is looking better all the time.
Your analogy seems crazy to Western values, but in much of the oil producing ME, it IS the woman's fault, and her father may kill her to untarnish the family name.
The unwinding of PO will really be about clashes of world views, values, and assumptions as we try frantically to maintain the status quo. We will die before giving up our easy motoring, and KSA will do nothing about their funding of religious extremism and outrageous birth rates.
PO, in a metaphysical sense, is about seeing the ultimate results of beliefs and values that no longer work in a post peak world. Statements like the American lifestyle not being negotiable, are a factual statement of how most Americans live, but it will be untenable once growth really slows and starts reversing. (As in ALL growth: energy supply, food supply, clean water, and human population.)
Odysseus--
Well said--
We are all living in a superstition based world.
I think we have evolved survival traits that are no longer applicable in the world
we inhabit--
Even with arduous education, the whole process is baffling, hard, and counter to
instincts that have kept us alive in the past.
You are thoroughly confused here - consult the original analogy once again. In 'honour and shame cultures', women do not get killed by their fathers for refusing to sell their bodies.
Let's turn it around. As oil supplies dwindle do the non-state owned companies have a responsibility to supply the latest technology to the state oil companies?
In both situations the answer is no but these are moot points because each group has what the others need; the marketplace will work no matter who the players are.
It was scary when a nation invaded another nation to try to secure oil supplies and then restricted open bidding for oil field development in favor of no-bid contracts to political supporters; then in the guise of establishing democracy merely dictated policy to the government against what its constituents demanded.
Another scary story was when investors were invited to bid on assets of a state owned oil company then paid money into the state treasury only later to find their CEO jailed and their entire company seized and auctioned off to state controlled oil and gas companies.
Or how about the time a nation elected a new president and after some multi-billion dollar investments were completed according to contract, tested, operational, patched, and fully operational, then the president decided since the projects were on national land they should be operated by the national oil company, cutting off those who invested in building the oil production facilities and left them with huge debts to pay.
Oil investment is risky business and with all risks associated with operating an oil company, it is a wonder oil is being produced around the globe every day. If you buy into exploration and production you might get rich or you might go broke.
Could you tell us the name of those countries?
I am familiar with countries where we bribed the thugs running things, they called in rich, flew off to Switzerland, and retired, and then the new thugs in charge wanted even more bribes.
Those countries I am familiar with. Mexico, Venezuela, Russia, Burma, Indonesia, Brunei, Algeria, Libya, Kuwait, Angola, Gabon, Iraq, etc.
What countries are you talking about where they nationalised our assets without us bribing them first? I'm sure they existed, it's just I haven't heard about them.
Montana put a severence tax on coal once the coal companies had built their coal mines. That I heard about, but I'm not sure what countries you are talking about.
Please post them here. I'm not being sarcastic. I'm sure they exist.
It wasn't Australia, or Canada, or Norway, or Britain, or the Netherlands, but it must have happened somewhere.
the marketplace will work no matter who the players are.
Looks more like an article of faith, not of fact.
Feel free to post links backing up your position and show your statement isn't just wishful thinking.
I Googled "Exxon Technology" and here is just a sampling of what popped up:
Exxon Neftegas digs world's deepest well
The project is expected to bring over $50 billion in direct revenues to the Russian state, as well as major infrastructure improvements, technology transfer and the supply of natural gas to people in the Khabarovsk Krai in the Russian Far East, ExxonMobil said.
Read the rest of the article and you find out the other investors in the project include Rosneft, the Russian state owned oil company.
On the next search results page is an article about refining and it notes that "Exxon builds a refinery abroad every 3 years." The article is here: Get Pumped Though the details aren't there, I would think that such extensive efforts around the world include tech transfer to some state owned partners.
Don't misinterpret my comments about the marketplace as necessarily positive. I am just making the observation that along with the instances of theft that Rainsong pointed out, the players in this industry need each other and they will work with each other, now and in the future.
And this is supposed to show what?
No where does that article say anything about MARKETS - which is what you were arguing.
But if you wanna play 'a transaction shows the MARKETS', then in the interest in dialogue I've got more questions.
If 'markets' are so 'effective':
Why did Russia take a private firm (GAZPROM) and convert ownership back to the state?
Why did Russia stop the market driven Shell pipeline?
Oh and...
Why, given the higher price signals from 'the market' have expressed WRT oil, is there not more volume of oil on line?
Yes transactions and markets are the same thing---especially when it comes to oil.
That is my response to your questions?
Ok, fine. Lets see if you can actually provide answers that are not self-referring.
Now you have spoken of 'markets' and 'transactions' - what do these terms mean, and what are the relationships of these meanings?
Please feel free to refute the claims here, as you have such a good grasp of markets.
http://www.globalresearch.ca/index.php?context=viewArticle&code=COO20070...
Well, well, it looks like Jerome a Paris has hit a sore spot with some folks....but of course, from the tone of his article, it sounds like he was hit in a sore spot! :-)
I thought I would let a few posts build up to see how the tone would go (not that it wasn't predictable, it broke down into pretty much (a) nuke their azz, ahhh, the hold old Gordian Knot solution!, and (b) of course they are under no obligation whatsoever to send anything to the U.S or the West., but yes, we are under a moral obligation to share all with them!, or the ole' "America and the West deserve as bad as can possibly happen to them and no better no matter what they do" argument.
Hmmmm, Is there any room for middle ground on this one?
Of course, the issue seems to be whether the suppliers want to be seen as truly reliable suppliers (a) all the time, (b) None of the time or (c) only when it suits them.
If the first is the case (all of the time) it creates a partnership of international trade that must in some way be honored on an ongoing basis. One should not be easily able to say, "yes, build your 3 billion dollar petro facility here" and then wait a few years and say "opps, changed my mind, and we'll take that facility by the way (ala Venezuela). This then moves into the catagory of (c) Only when it suits them. Petroleum development, both oil and gas, rely on long term contracts and, here's the tough one: TRUST. Of both parties (sometimes more) by both parties (sometimes more).
I have not mentioned (b) None of the time, because most nations simply do not want to cut themselves off from the world in that way. But if they do, from a purely moral perspective they should be allowed to. However, they would expect little or no leeway from the West in assistance of any type. Of course, we know that we would still, on a humanitarian basis, leak some help in if possible from the world, it is just too sickening to watch the innocent starve year after year. North Korea is probably the closest example to a "reliable none of the time" nation, but it does not seem to have oil.
But wait? Would you really deprive a nation of food or protection or medicine if it did not want to be a "reliable partner", especially in the case of oil and gas?
Think of it this way: TOD and others go to great effort to tell the world that petroleum is at the base OF EVERYTHING: Food, medicine, our military, our very way of life! It is survival! If that is the case, why would we give away increasingly valuable materials, extracted from petroleum, to those who would not sell us petroleum? If they choose to opt out, then it has to be assumed the world will be different for them than if they choose to opt in.
Of course, in Western style business, which is now all over the world, there are arrangements. These are the arrangements which are now laughed off as a joke by the left and the "deep green" back to the stone age dreamers, but, they are arrangements that have created the petroleum industry. That industry, nationalized in places, private and shareholder companies in other places, does exist in a big way on Earth. That is a fact of existence.
Arrangements: Partners open their books to one another, they bond themselves for surety when possible, they sign contracts which are enforcable, and they commit to the feduciary responsibility of their stakeholders. One of the stakeholders is of course the customer.
If you are going to pretend to be a "reliable supplier", it goes without saying that you do not try to destroy (a) your investors or (b) your customers.
You do not assure them one thing and deliver something else.
For example, if I promised to sell you 20 jet aircraft engines, and you then got the cotract to build the jet aircraft that uses them, but when you returned for your engines, I said, sorry, we are holding them in reserve until the price goes up.....leaving you with contracts you could not fulfil, I would have potentially destroyed your business, be subject to enforcable breach of contract, and be dismissed in the industry as an unreliable supplier.
So, do the national oil companies have a "responsibility to bring the oil to market"?
ONLY if that is what they have agreed to do. ONLY if that is what they have taken Western investment on the promise of doing. ONLY if they have taken and are taking Western protection on the promise of doing. ONLY if they understand the importance, and the HIGH PRICE of opting out of being a reliable supplier. If they DO NOT want to be one, that is o.k., ADMIT IT.
If they do, they must consider their actions in the larger scope of the world.
For the Western consuming nations, I have long felt that information is the first step: We should create a list, published world wide every month, that gives a status to our oil and gas suppliers, both corporate and national. This list could be colorcoded, from say White (fully reliable and responsible) to Red (unreliable and not responsible) and say 3 colors in between, for a 5 color status.
For example, at this moment, it Venesuela would be one short of Red, (It is still exporting some oil, but is attempting to nationalize property and effort of other nations in clear breach of contract.
Full White rating would be, for example, Trinidad and Tobago on natural gas, and Canada. Saudi Arabia might fall just short of White on the basis of unwillingness to give full and fair accounting of planned production and ability to deliver.
To be fair, the consuming nations should also report to a 5 level White to Red standard, on the basis of attempting to restrain and predict fuel consumption and reduce greenhouse gas. If a nation goes completely Red, i.e. displays no effort to reduce consumption of energy, no effort to reduce production of greenhouse gas, but is simply trying to import and hoard all the oil possible to attempt to take control of world currency, they should be listed Red.
China comes to mind as being very, very close if not there.
So despite Jerome's screaming tirade against the West (why does that not surprise me?), all parties, if they intend to do business in the world, have reponsibilities. That is why the United States is struggling so hard for redemption. Invading countries on false pretense is not a good way to live up to your world responsibilities. But if you used the standard used by many oil producing nations, you could say, "hey, we never signed a contract with you saying we wouldn't invade, right?"
Dispite the rabid diatribe against mutual responsibility, Jerome actually does say something very important:
"we need to work on what we actually control: our demand."
ABSOLUTELY. The Western world is being gutted. We are being lazy. We are letting our power, our money and our dignity be bled to death. We refuse any, ANY workable future with "sour grapes" whining,
Solar? "It won''t scale....sniff, sniff
Wind? "It is variable.....sniff, sniff
Plug Hybrid...."the batteries won't last long enough...sniff, sniff.....(so buy new ones, it's our national security we are talking about!! Your going to give the money to OPEC anyway!
Hydrogen...."it's not efficient to convert and it's dangerous....sniff, sniff...
(yeah, natural gas is dangerous too and we use it....not efficient? Compared to being bled to death by our enemies?
The American people hear from the oil companies, "your can't do anything but ride our train to the end."
They hear from the peakers, "you can't do anything but ride the oil train to the end."
AMAZING, the similiarity of arguments, is it not? :-)
At the end of the day, the fact stands: Whether peak got here last year, or it doesn't get here until 2060 or 2100, WE ARE NOW IN EXTREME DANGER AS A NATION, AND ANYTHING REMOTELY FAMILIAR AS FREEDOM AND DIGNITY ARE IN JEOPARDY, UNLESS WE FIND ALTERNATIVES, CUT CONSUMPTION, AND ENGAGE IN THE MODERN NATION BUILDING RIGHT HERE AT HOME THAT WE CAN DO NOW.
note: I am shouting at the Americans. The Europeans, of course, will make their own choices. If we are smart, we will trade ideas and develop together.
But as Jerome points, niether party has any obligation to trade and learn.
That is a choice.
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
If your only available mechanism for enforcing agreements is to buy your oil somewhere else, you're kind of SOL when there is no somewhere else. Contracts aren't holy writ; even in the U.S. they can be nullified when the circumstances change.
And post-peak the producers won't need the consumers' trust.
"And post-peak the producers won't need the consumers' trust."
Folks, kick that one around for a bit: These oil "producers", you know, the ones that use Western helicopters, western guns, western radios, TV's, Western medicine, wester autos and trucks.....all of sudden they need NOTHING except oil.....they willl be able to convert oil into everything they need, no matter how they deal with the other nations of the world, no matter how they break contracts, no matter how they decide to nationalize and threaten property placed in their nations by other nations.....they are suddenly gods.
Bullshit.
That oil is nothing but sticky garbage without the tools to convert it.
And remember, if you believe the doomsters, the amount they control is declining fast! Folks there is a reason that they call EVERY SINGLE technical advance a "silver bb", there is a reason they MUST keep up us hooked by way of our infrastructure to that pathetic one cubic mile a year. We may be hanging by a thread, but they are hanging by a thinner one.
RC
Remember, we are only one cubic mile from freedom
Why would I look to the "West" if I wanted to build a refinery? I'd look to the guys who built the most recent successful refinery and had the experience, or the guys who manufactured the components, or the lowest cost.
And do I think that oil producing nations, even if they have committed the ultimate bad of nationalizing their industries and not keeping the "West" happy, will be able to get the technology and investment they want? Sure. It's already happened with one of your code red nations, Venezuela., and it happened when oil was a lot cheaper.
but they are hanging by a thinner one.
Are 'they'? 'We' are told 'they' 'want to kill us' and are willing to 'kill themselves' to 'get us'.
If one is willing to kill themselves - strikes me that there is a lack of hanging on threads....
Lordy lord. YOU surprise ME, Roger, with your rabid nationalism / free-trade ideology. Jérôme the bolshevik banker is a mainstream, middle-of-the-road European, i.e. a Westerner too. As a Westerner myself, I don't detect anything anti-West in it. He and I do seem to differ from you on trading ideology, however.
The idea that trade should be free is a good one. The idea that this implies that it is OBLIGATORY is a strange one, but implicit to many, it seems (it forms the backbone of the WTO's principles, if not its practices).
The rude awakening of oil customers, and their sudden DEMANDS that oil MUST be sold to them, is premised on the fallacious idea that there was a pre-existing free and fair market. The reality is somewhat at variance with this.
Resource extraction in the poorer countries, to cater for the needs of the richer countries, has always been dominated by the richer partner, who fixes the terms of the contract.
i.e. it's always been a power struggle. Except on rare occasions when one country has a near monopoly on a particular resource, or several countries can co-operate to control supply, it's always the rich buyers who call the tune.
Is this OK? It is, if you consider that the buyer should stay rich and the seller should stay poor.
Does it have anything to do with free trade? Well, I think it's the underlying unacknowledged ideology behind the current proponents of that doctrine.
How does this apply to oil? The very fact that most oil-exporting nations have very little else in the way of a productive economy illustrates how effective the unequal relationship between buyer and seller has been. The buyers collude with a local elite, who are bought off, and most often work for the interests of their foreign clients in preference to those of their own nationals. i.e. the proceeds are reinvested largely in the burgeoning economies of the client countries, rather than being applied as productive investment at home. If a certain number of nations have woken up and started flexing their muscles in a constrained market, well, so much the better for the locals who have been short-changed for so long.
Another aspect of the same thing. If the responsibility were indeed mutual, the oil nationalists might have a case to answer. But be honest Roger : what have WE done for THEM lately?
Focus narrowly on oil-producing nations if you like, but it would be more coherent to look more widely at all trading of extracted natural resources. How has the very fine and noble concept of "mutual responsibility" manifested itself in the past?
Uh, why we sell them our manufactured goods and services. Isn't that noble of us? For example, if doctors are needed in Africa, we just train them up by the thousands and ship them over there.
Well, don't we? ... You mean we don't?
alistairC
Ahhh, good pair of posts, alistair and your a tricky debater! :-)
You would have me trying to argue in favor of Colonialism, or better said, Neo-Colonialism, and that I will not do!
The West is guilty of enough sins I will not spend my days being an apologist for it, we are now stuck with playing the ball where it lies. By the way, the "poor" and developing nations are not beyond reproach either, but again, we play it where it lies.
Your key phrase: It is a power struggle. That is absolutely true, and of course, the Western consumers can completely abandon the power struggle, or we can try to play in a fair way that allows for our and the "poor" nations to continue to survive and hopefully prosper.
You make many good points, and ask some good questions, and inquiry is what is key. I was simply taking the position that the knee jerk reactions (a) nuke them, invade them, take it and (b) the West is the spawn of satan are both equally flawed. If we in the West and the developed nations want to do business with each other (and again, most do becuase there are benefits, and due to technology, it is almost impossible to be completely cut off from the world) we need to come to some honest way of arranging such business.
For example, is a contract between a Western power and a developing oil supplying nation always Colonialism, and therefore voided whenever the poorer nation chooses to void it? If I give you assurances that I will make the investment along with you to provide X, am I obligated to attempt to live up to those terms? If I cannot, should I at least be expected to declare force majeure and be honest about why I cannot?
This is very basic stuff. Oil and Gas require massive long term investment, long lead times, and long waits for Return On Investment. The collapse of international standards will mean we won't have to worry about geological peak, the oil and gas will lay under the ground undeveloped. No one will make those kind of investments with no assurances.
Again, no one should be forced to play. We know that Cuba has oil and gas deposits, for example. We have not been willing to deal with them. They would perhaps be willing to deal with someone other than us. To this day, we have not chosen to invade (what tomorrow brings who knows, but invading them to force the oil out of them we would not consider responsible behavior, that would simply be a naked power play, a whole different bit of business, would you agree?)
Your closing question, "what have WE done for THEM lately?"
Fair question, but let's turn it around: What do they WANT us to do for them?
Let's get it out in the open. What do they need that we feel we can do and still survive, and have our allies survive? Iran would of course say they want all the nuclear equipment we would send and the power to use it in any way they see fit. Could we do that? Would not Saudi Arabia then need the same thing? Are most of our oil producing friends in need of medicine, food?
Astounding, many of the world's oil supplying nations are in need of energy!
Does this tell you how convoluted the world is? Iran is talking of rationing petrol, and Nigeria has a fuel crisis!
Doctors? They have men and women, we have medical schools, let's work a deal! They have oil, we have technology, let's build refineries there (helll, we won't let anybody build them here in the U.S.!
We can negotiate. But, as I once heard a diplomat say, "just about anything is negotiable except my right to exist. If you begin the discussion with the position that I have no right to exist, negotiation is over, because that is not negotiation, that is suicide. I will fight to the death, and why not? Negotiation would mean I am dead anyway."
So let's talk. As Churchill said, "Jaw, Jaw, Jaw is better than war, war, war."
:-)
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
Yeah. When the Israelis denied the Palestinians a right to exist the Palestinians started a war that bled what was potentially the richest country in the world halfway to death over three generations.
Who would ever have thought that a nation composed of the intellectual elite of Europe, with massive investment and subsidy by Europe and America, would wind up with a standard of living equal to Chile?
I'd have given the country back to the Palestinans and started a Singapore someplace.
Kerguelen should be nice and warm pretty soon...
But this topic is drifting.
Excellent post!!
In any event, prudence calls for us to operate going forward under the assumption that most suppliers will not be reliable in the long term. We could start by taxing so that we pay the full , militarized cost of gasoline. Externalizing all costs would go a long way to making people fully understand the risks involved in relying on uncertain supplies of oil. Yes, we can continue to use the military solution, the fear solution, if you will, for "ensuring" long term supplies. The reason this is so seductive is that we pay for this out of thin air. We pay with deficits and let us others die, so the short terms costs are perceived to be virtually nonexistent.
Let's get this down to a personal level. I live in the boondocks and have thousands of trees that could be used for dimensional lumber or firewood. Am I going to clearcut my land because you want my wood? My answer is, "Screw you!" I don't care what you offer in payment.
Now let's say you gather up the troops to "take it over for public 'need'." I'll wait until you spend lots of time and money getting ready and then light the whole damn forest up. Have I financially hurt myself? Sure. Would I care under these circumstances? No.
I think we'll find an "ideological" way of justifying and and rationalizing armed intervention in order to access "our oil". This wouldn't be all that hard to do as many of the major suppliers of oil are "unstable regimes". It wouldn't take much to justify "humanitarian invervention" or "Liberal imperialism" in Saudi Arabia, for example. One could connect them to "Islamic extremism", their lack of respect for human right and the rights of women, the way they treat their minorities... Venezuela would be a piece of cake with a little bit of well-organized "social strife". We've already "succeeded" in occupying Iraq with it's supposedly vast untapped oil reserves. The list just goes on and on.
This term "resource nationalism" is also very vague. What does it really mean? Does it mean these countries are being selfish when they put their own longterm national interests before our own? But make no mistake this concept is going to be one of the most important and dangerous, as we become increasingly reliant on imported oil and gas. There is a fundamental conflict brewing between us and them. It's not as if they aren't willing to sell us oil, the problem is, they are perhaps unwilling to sell us oil in the vast ammounts we require, and looking at our monsterous and wasteful use of oil, why should they? Well, the answer is simple, either they sell us their oil and dramatically increase production, or we'll find some excuse to go in an take it!
On another forum someone posted a comment that highlighted the very real possibility that NET Gas exporting countries who go NET Oil export negative will begin to use up more and more gas themselves (gas to liquid).
This would mean that they go NET gas negative much quicker than expected.
The main situation I am thinking of here is Russian Gas export to Europe -everyone seems to be assuming that Russia will continue to 'bail us out' with gas but how long will it be after they stop exporting oil that the gas taps will be diverted for internal use?
Those Canadian Tar Sands will hopefully allow Canada to remain a NET gas exporter for a while.
What's predicted PO date for Russia?
Regards, Nick.
"What's predicted PO date for Russia?"
The same as for everybody else, somewhere between 1975 and 2100.
RC
PO date for Russia is 1986. It's unlikely that they will reach that level again (the question of how high the second, post Soviet collapse, peak will be is still open)
Huh??? How does burning up all our NG turning tar sand to oil help our export of NG or even our domestic supply/reserves?
Indy
Somewhere in Switzerland moves the Michelin HyLight automobile. Powered by a refueling station that supplies it with electrolyzed hydrogen and oxygen, sourced in water and 50m2 of PV.
Go here...
http://www.businessweek.com/innovate/content/may2007/id20070508_055560.h...
I really need to get the attention of the guys working on the Geothermal Dry Rock project. We have a likely place in Windhoek, the place had hot springs. We need to chat with them about the data we need collect to evaluate the resource.
If any one knows anyone at either or both of these places, please ask them to contact us at goprisko@iway.na
Scientific Coordinator EEIG Dr. André Gérard +33 (0)3 8880 9913 gerard@soultz.net
Geophysicist EEIG, BESTEC Dr. Jörg Baumgärtner +33 (0)3 8880 9914 baumgaertner@soultz.net
Power plant, Pfalzwerke AG Dr. Dariusz Szablinski +33 (0)3888 05363 szablinski@soultz.net
Petrophysic-Consultants
Am Nymphenbad 8
81245 München
T: 089 8969 1118
F: 089 8969 1117
I: www.petrophysic-consultants.com
e.terras AG
Richard Strauss Strasse 76
München
T: 089 9221 4263
I: www.eterras.com
Thanks,
Indy
Indy
Gentlemen:
All this ranting.,.. sounds like me at DLR and the other solar suppliers.... how to get their attention...
But lest you forget..... Chavez was nearly killed by the CIA in that coup... for him it's up close and personal, because the US didn't stop trying to destroy his government, and what he feels is the right way to help his people. Never forget that Chavez is mestizo, not of Spanish blood, ie: one of the disenfranchised for 5 centuries.
Same with Russia.... she tried to accommodate herself to the EU and what happened? You destroyed the savings of her citizens and turned her daughters into prostitutes, then you ridiculed their attempt to keep from starving. Never forget western europeans went east 3 times... causing massive destruction each time...
Then we have China.... europeans corrupted their entire society with opiates... to get tea, ceramics, and silk on the cheap....
Finally we have Iraq... Europeans and now the US have tried to control their oil through the barrel of a gun since it was first discovered. The current attempt is a quagmire.
To get these and other actors to find common cause with the idea of "free markets" ala NYMEX and LCE.. you have to get them over the usual way things worked, when their resources got too expensive... ie; central bank money flowed into hedge funds for the express purpose of crashing the currencies of resource suppliers, to deprive their populations of the means to buy... does anyone think the ASEAN countries have forgotten 97? OR the Chinese and HK folks 98?
If you were a producer... faced with imminent invasion from your customer... would you bother to spend your resources creating the very bonanza your customer wants? Or would you run the whole thing into the ground... so you were less of a target? Or would you ally yourself with a partner with veto power on the security council, who offers cross investment and security?
Regarding KSA.... just where is all the feedstock for these petrochemical complexes going to come from? Exports??
Think?????
Indy
Indy
What you are witnessing is the creation of a parallel
trading system. Iran produces rail cars, automobiles, cell phones, electricity generating plants. She and Russia and India and China are selling these things to Cuba, Venezuela, North Korea, Ecuador, Bolivia, Serbia, Afghanistan, Nicaragua..... all the axis of evil countries... who in turn are supplying their products.. and none of this is priced in either USD or EURO...
Did you know that North Korea has some of the largest Uranium deposits, and were I them, I'd see the attempt to keep them from exploiting same by their archenemy the US as nothing less than war.
Counterfeiting? Hmm... how about economic warfare...
Now..
No tickee, no laundree... ie; want us to shut down? We want our money back and our banker made whole...
Take your time....
We're busy....
How's the dollar doing....??? Hmm.....?
THINK !!!
Indy
and the national oil companies’ failure to reinvest profits in production,
So we should probably apply to same logic to the majors. They're betraying the "West" by failing to invest their profits in more production for us. Sounds like a windfall tax is called for.
What is OUR oil doing under YOUR deserts/toundra?
http://en.wikipedia.org/wiki/Carter_Doctrine
Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.BUT:
If the only vote one has is where you spend your money (and what money you take) what happens when no one takes US Dollar for trade?
The Carter Doctrine was aimed at the Soviets who less than a month earlier had invaded Afghanistan. The idea that ME oil is a vital resource of the US is absurd. Most of their oil goes to our economic competitors in India and the Far East particularly Japan. Everyone we have a trade deficit with either sells or is a big customer of ME oil. The well being of the American people has nothing to do with why we are militarily involved in the ME. We are there for the benefit of those who sell imported goods produced by cheap Far East labor like Walmart and Target.
The US does not need ME oil, Wall St does and Wall St doesn't give a damn about what happens on Main St.
Not to sound snide Thomas, but isn't oil traded on the market? If the Middle East oil left the world market, then wouldn't that raise the price of the oil that remains, lowering the amount we could purchase?
Asia is so integrated into the US economy, I think China not getting oil would be as devastating as California not getting oil.
The US does not need ME oil,
Need, no. Want - sure. Humans don't NEED oil, but life is a whole lot easier with oil.
On 'Da Drum' a while ago it was pointed out that The Kingdom of SA was growing grain in the desert.
A reaction to BOBBY "SOFINE" BUTLER and 'Cheaper Crude or no More Food'?http://blog.wfmu.org/freeform/2006/05/songs_of_bygone.html
It seems that oil will get used - one way or 'da other - oil shipped someplace else means the US of A has oil they can buy.
So long as others will take the FRN's.
My point is that if outside military force is needed to insure that ME oil keeps flowing it should be those closest to the supply who should provide it. For far too long have the economies of Europe and east Asia been protected by the American taxpayer and jobs lost to cheap foreign labor.
Yes.
The energy trade is one of the most vital pieces of the world economy. Major players in the oil trade have carved out pieces of that business for themselves, and in doing so have forestalled their clients from developing alternative sources (either for oil or via lowered demand). That kind of vital and long-term business relationship brings with it responsibilities.
Consider, for example, if Enron was the sole supplier of electricity to an isolated small town, and then simply cut off all power one day. It's their electricity, sure, but the relationship they had entered into with customers in that town - controlling the town's electricity trade - means they have a moral (if not necessarily legal) responsibility to those people.
Much the same with oil producers. Or food producers. Or any other producer of vital goods. Picture what would happen if America suddenly decided it didn't need to grow food, and would just buy it all from the international market - millions would starve, but they wouldn't be Americans.
When you make someone depend on you, you have a responsibility to not yank the rug out from under them.
That didn't seem to be what the article was saying; let's look at a little more context:
"It is unclear whether that responsibility is as important to those countries as meeting their needs at home.
For, as Jim Mulva, chief executive of ConocoPhillips, the US’s third largest oil company, says: “The [national oil companies’] host country may have other strategic objectives, which may limit the speed by which they develop their resources.”"
The way I read that is that some countries (Mexico is notorious for this) are siphoning funds out of their national oil companies, systematically starving them of the money they need to continue business. That's bad for everyone - the country sacrifices long-term revenue for short-term gain, and its customers face long-term shortages.
Is it their right to do that? Of course.
But that doesn't mean it's a wise course of action, or that they aren't shirking their responsibilities towards their customers.
Is it their right to ignore their responsibilities? Of course.
But doing so isn't a good idea, in general - it leads to a breakdown in the business relationship, causing short-term hardship for the customer and long-term loss of business for the producer, as the customer finds some other - more reliable - option.
However...
...your overall point is absolutely right.
It's not that it's hard to understand - it's just that it's hard to do. Or harder, at least, than having someone else pester NOCs on your behalf.
I certainly agree that even in Europe (much less America) we could substantially reduce energy consumption without losing our quality of life. Doing so takes effort, though, so it's a mistake to suggest it wouldn't be hard. It would (will) take effort to adapt to different lifestyles (walking vs. driving), effort to adapt to different behaviours (turning out unused lights), effort to adapt to lesser conveniences (setting the AC 2 degrees higher), and effort to do all the other things we'll need to do to reduce energy consumption - European cities are, in some ways, substantially different from American cities, and that takes some getting used to.
We all may end up happier and healthier as a result of those efforts, but how many people do you know who say "I should go to the gym" and then don't go? We're pretty lazy by default, so it should be no surprise we're resistant to change when there's little cost to staying where we are.
When that changes, though - when oil supply increasingly cannot keep up with where demand wants to grow to - our responses will also change. Even a $20/bbl move last year saw fairly significant reductions in demand, even in the rich countries. The harder it gets to supply demand, the higher that'll send the price, and the more people will be motivated to make the changes they've been putting off.
Will it be enough? Who knows. Absent some of the more speculative "fast crash" scenarios, though, it seems likely that it will be.
Let me paraphrase you.
Suppose that you have one chicken that gives 2 eggs per day. You keep one for you to eat and you sell the other in the marketplace.
As time goes by your chicken gets old and just gives one egg per day. What would you do? Keep selling the only egg you have because you have responsibility towards your costumers?
Your analogy fails because it fails to take into account scale.
Suppose that you have every farm in the country. Everyone depends on you for food. You have a responsibility to maintain a reasonably stable supply of food.
Suppose that, instead of buying enough seeds for next year, you would rather buy fancy clothes now.
Your countrymen rely on you to produce food, and the sheer scale of that relationship means it's not feasible for them to start their own farms in the weeks they have. They'll need to import food from other countries at high prices, or starve if they can't. But you'll have plenty of food - and may even make more money due to the high prices - so you're not worried.
The scale of the trading relationship makes it hard to find substitutes in short order, and creates responsibility.
You make a decent argument on responsibility - but it would be stronger if the exporting countries had willingly decided to enter into that industry on their own - and as part of a bilateral deal, explicit or implicit.
You can argue that it is the case in the gas sector (and that's usually reflected in long term contracts); in the oil sector, it's a bit harder - these countries effectively gained their sovereignty (if at all) on their oil industry when it was already developed (by the West) and making a huge chunk of their economy.
Most major NOCs have had control for decades, and could have reduced the scale of the trading relationship over many years had they wished to. With the possible exception of Iraq, it's not reasonable to suggest that oil-producing countries are unwilling participants in the international oil trade.
It is becoming transparantly obvious that peak oil is happening. We start seeing the stories from oil companies that the declines in supply are not physical, but because of "lack of investment." Blaming State ownership of oil resources. Now Saudi is saying they are likely to hold back investment, not raise production 'because of conservation efforts in the world.'
That is precisely peak oil. Extraction costs going through the roof, not being able to economically get at the oil without prices going higher and higher and higher.
So we will see it now, supplies beginning their inexorable decline, and in the next phase the oil companies doggedly arguing that it is NOT peak oil, but the fault of (fill the blank - weather, lack of trained people, state ownership, conflict, etc. etc.)
The first stage of grief is denial.
That you believe something does not make it true.
What's the turnaround time between investment in exploration and start of production? Given oil prices in the late 90's, a subsequent lull in new production should hardly be surprising.
Moreover, this isn't even new. It's been known for a long time that some NOCs - Pemex being the poster child - are used as cash cows by their government, and saddled with either debt or corruption that limits their ability to operate.
No. Peak oil is when the amount of oil extracted peaks - hence the name. Which it has not yet (by the IEA's all-liquids measure, at least, although there are valid questions about which measure to use).
So is the first stage of being stubbornly wrong.
And the second stage.
And the third...
If it was "transparently obvious" that peak oil was happening, you wouldn't be in a tiny minority. It may be that peak oil is happening, but it is not "transparently clear", and insisting it is so suggests a disconnect from the rest of the world.
The relations between the ‘west’ and some oil producing nations, varied as they may be, are co-dependent, and not only in the sense that some parties want / need to sell, others to buy, which sets up contractual relations.
The present state of affairs in the ME - eg. Occupied Iraq, Saudi a client state, etc. - is largely, but not *only*, the work of the US. In some sense, the huge problems facing us all now, are an outcome of the fact that the relations between producers, buyers, sellers, are not relations between countries (where talk of obligation or responsibility might be applicable, beyond ‘contracts’) but between elites and business interests of one kind or another.
The stereotype is the Saudi Royals who treat with the US Gvmt., OPEC, and oil companies; these dealings permit them to remain in charge, maintain dominance, stay rich, and neglect the basic interests of the country as a whole. Their petro dollars buy arms from the US...and so the merry go round whirls, flashing horses, camels and fairy coaches, glitter in the sunlight.
Decolonisation in the late 60’s changed the picture (until then the ‘west’ really had tremedous powers); the oil shocks of the early 70’s prompted a certain kind of awareness; so a new type of domination was set up, an underground one, between the elites who thought they could stay on top - basically a collaborative enterprise.
Pan-Arab nationalism and ‘socialism’ (really only a type of social ‘participatory, pluralistic’ democracy, or hopes of such) was killed off, Iraq was in a way the last bastion. (Egypt, for ex., having capitulated long ago..)
So, yes, there is responsibility to continue to sell as much and as fairly as possible, if one considers that honor amongst capos should prevail, and resources - the free lunch, the power kick - should be managed by small groups, the riff-raff that rises to the top thru birth and accident, and adopts a ‘free market’ ideology to promote themselves and theirs. If that pov. is not accepted, then it is a whole different scene and discussion.
Jerome points out the fallacious argument used by welfare recipients the world over --- that those who have wealth or resources have the "duty" or "responsibility" to supply the others with resources.
We in the west live in an entitlement society, with greater entitlements every year: food, shelter, health care ... all considered an entitlement. If I haven't had the discipline in my life to obtain these through my work and free exchange with others, the they must be taken by force and given to me. If I don't have as much as I think I "need", then others must be forced to provide it.
Why should energy not be any different ?
If I don't have to be disciplined in my personal life, why should my country have to be disciplined ?
Advocates of the entitlement society have brought us to this place. Jerome rightly points out that what we need to control is our demands, and that holds for all aspects of our society.
Absolutely SPOT ON!
I read some of the whining from European Leaders regarding Russia and how they view getting access to other peoples wealth on demand and thought WTF? We are entitlement junkies. Even our 'leaders' are entitlement junkies.
I think the rot set in with large standardised entitlements, social welfare as a right and with no social responsibilities and the creation of an entitlement culture back in the 70's. Maybe earlier.
Europe has had a free ride: Less on weapons and defense while under the US Nuclear umbrella. The free lunch of North Sea oil and gas.
Things started rotting when the word Citizen was exchanged for 'consumer' . That about sums us up now: 'consumers'.
Instead of thinking 'ok, how do we engineer a way out of this mess?' It becomes a case of 'ITS NOT FAIR! I want my cheap plentiful oil and gas.
We deserve everthing we will get, and will get everything we deserve.
Good luck to Russia. She can decide to do whatever she wants with HER PROPERTY. And that is one of the first rules of a free market economy...
Russia, after 3 major invasions from the west as Jerome rightly pointed out, and after being injected with the virus of Management Consultants and World Trade Rats does not owe us a penny.
So, the boot is on the other foot and its kicking.
End of History - My Arse!
Well Well, welcome to the real world Europe...
That's different.
In a society you can't let part of the people fall outside into poverty. They will fight back.
It's the "social contract". Yours is a libertarian argument.
http://en.wikipedia.org/wiki/Contrat_Social
The social contract has been overcome by an entitlement culture running from the very top down in Europe and the USA.
This enttlement culture stops us from analysing problems and coming up with workable solutions. Most notably as Jerome pointed out curbing Demand.
It has not hit us head on yet, but it will and very soon.
And from the Leaders down, no one will know how to respond.
BTW: In the Times today - US Gasoline stocks at lowest for 16 years.
Curbing demand will only put the crisis date a bit further off. We are better having a crunch now, while there is fat to lose, than when we have higher efficiency.
As others have said - if you increase your fossil fuel efficiency, you just make the ff more valuable.
The initial post-peak phase in which lots of psychological pre-acceptance behaviour modes are on display will involve several types of brinkmanship. The US will be involved in food versus oil poker plays ("sell us your oil or we don't ship you any food" or vice versa), as well as the sort of tactics involved in what your options are if you're holding a significant fraction of The Ogre's debt.
ciao,
Bruce
A timely news item:
http://news.bbc.co.uk/1/hi/world/asia-pacific/6649169.stm
The russians are going to 'manage' Turkmen gas for us!
I don't think the seller is required to provide the goods. However the world revolves around oil and so in a way if they do not sell us it, it can be the same as attacking our economy and thus seen as an attack on the country.
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