Thursday, March 20, 2008
Sunday, March 16, 2008
Who knew what? The CIA and the Soviet “peak”
One has to wonder what level of peak oil awareness exists among governments. It seems at the policy level that they’re not doing a lot to address the coming shortages, but there are a number of reasons why this could be, and inaction in itself does not necessarily point to ignorance..
A CIA report, an Intelligence Memorandum titled "The Impending Soviet Oil Crisis (ER 77-10147)," was issued in March 1977 by the Office of Economic Research and classified "Secret" until its public release in January 2001 in response to a Freedom of Information Act (FOIA) request (available from http://www.foia.cia.gov (enter “er 77-10147” in search box). As Richard Heinberg notes (1):
The Memorandum predicts an impending peak in Soviet oil production "not later than the early 1980s" (the actual peak occurred in 1987 at 12.6 million barrels per day, following a preliminary peak in 1983 of 12.5 Mb/d). "During the next decade," the unnamed authors of the document conclude, "the USSR may well find itself not only unable to supply oil to Eastern Europe and the West on the present scale, but also having to compete for OPEC oil for its own use." The Memorandum predicts that the oil peak will have important economic impacts: "When oil production stops growing, and perhaps even before, profound repercussions will be felt on the domestic economy of the USSR and on its international economic relations."
Heinberg notes that the peak in US oil production had already passed by the time this memorandum was written. He suggests that, at US insistence, the Saudi Arabian government raised production levels, helping to reduce the USSR’s capacity to raise foreign reserves. Whether or not it was a coincidence, the actual peak of Soviet production preceded the fall of the Berlin Wall by only two years. Perhaps not also coincidentally, the peak of US production (1970) was followed not long after by the decoupling of the US dollar from the gold standard.
(It’s worth noting, though Heinberg does not, that the memorandum’s dire predictions for Russia are due in large part to its reliance on exports for foreign exchange and regional influence. The central problem with the decline of oil production is a reduction in national income and higher energy prices, but the report also suggests that Russia will be able to pick itself up by diversifying its economy and developing coal and natural gas.)
Surely the most significant implication of this document is, as Heinberg notes, its status as clear evidence that US security analysts were well aware of the phenomenon of peak oil and its potential implications. (This might be thought of in terms of the value of the US “containment” policy as a means to exclude the USSR from benefiting economically from its significant oil production capacity.)
Interestingly, Heinberg also alerts us to the fact that Matthew Simmons, author of Twilight in the Desert and a leading voice on peak oil awareness, was an advisor to Dick Cheney’s Energy Task Force. (Check out Simmons’ recent presentations at http://www.simmonsco-intl.com/research.aspx?Type=researchspeeches. What is not clear is whether Simmons was himself really thinking about peak oil in 2001. Twilight was published in 2005, and the book details Simmons’ own awakening to the peak in Saudi production, which he equates with the peak in global production.)
The same declassified report was met by Time magazine with an assurance that the conclusion was “faulty” and “at odds with reality” (2). Nonetheless, Time’s confidence leaves room for doubt:
To be sure, Soviet oil production was trailing off. But the Soviets were not running out of oil. Nor would they become dependent on imports. Rather, they were using primitive technology and needed to make investments in their infrastructure. In fact, Russia today is the world's second largest producer, after Saudi Arabia. Instead of becoming a major buyer of Middle East oil, as the CIA had warned, Russia ships 3 million bbl. a day to other countries, including the U.S.
As all this makes clear, the former Soviet Union was not running out of oil. Neither is the world. The one exception: the U.S., which was the Saudi Arabia of the first half of the 20th century, is finally running out. As a result, thanks in part to American policy that put an emphasis on foreign intervention rather than domestic conservation, Americans are more dependent than ever on imported oil.
In recent years, of course, the Russian oil deposits have seen significant investment, and there is debate about whether Russian production is approaching a second “peak”. More interestingly, perhaps, is the way the Time article neglects the implications of the decline in US production, which peaked in 1970. Surely this decline is not due to a lack of investment or up-to-date technologies. Surely the US decline is near proof that technology can’t solve this particular problem. Surely the US is not “the one exception” in a world of finite oil fields (check out the North Sea, for instance). We can keep looking, and may yet find lots more oil, but it seems to me delusional to deny that sooner or later the global peak will arrive.
(1) Richard Heinberg, Smoking Gun: The CIA's Interest in Peak Oil (Special to From the Wilderness)
by Richard Heinberg (August 2003) http://www.fromthewilderness.com/free/ww3/081503_cia_russ_oil.html
(2) Donald L. Barlett and James B. Steele, “The Oily Americans”, Time,
Tuesday, May. 13, 2003
William R. Clark, Petrodollar Warfare: Oil, Iraq and the Future of the Dollar (New Society, 2004), also available on Google Books.
The Gulf, Energy, And Global Security. Edited by Charles F. Doran and Stephen W. Buck. Lynne Rienner, 1991, 234 pp. $35.00.
Matthew Simmons, “Twilight in the Desert: The Peaking of Fossil Fuels and the Transformation of the National Security Environment”, Pentagon Briefing, Washington DC, Feb 19, 2008.
Campbell, David, The Biopolitics of Security: Oil, Empire, and the Sports Utility Vehicle
American Quarterly - Volume 57, Number 3, September 2005, pp. 943-972
Doug Stokes, “Blood for oil? Global capital, counter-insurgency and the dual logic of American energy security”, Review of International Studies (2007), 33:245-264
Energy Security: Current and Future Strategic Challenges, A Special Edition of Strategic Insights 7 (1), Feb 2008, http://www.ccc.nps.navy.mil/si/2008/Feb/introFeb08.asp
Tuesday, February 19, 2008
Snow. My son is five days old today. Energy security tonight is keeping him warm. It’s a warm bath, lemon tea, a separation of our lives from the wind and falling snow outside. Energy, in its most important form tonight, is heat. But also light, light to read by, to write by. Light that is the words on the page, the page itself; this light, if a bit sickly, shines nonetheless.
Post partum is a strange elation, and then a contest, perhaps, of new pleasures and new stresses, all atop the old. An all-consuming time. But the world of energy is alight, so much happening, I will try to document a few pieces that have come my way.
The most recent, a comment by German regulators that things may not be well in old Europe.
German regulator warns of Europe power shortages
Tue Feb 19, 2008 6:06am EST
ESSEN, Germany, Feb 19 (Reuters) - Europe risks power shortages if it does not press ahead with new power station projects to replace and add to ageing generation capacity, German energy regulator Matthias Kurth said on Tuesday.
Coal-to-power projects were being cancelled because operators feared tougher emissions rules or because citizens did not want polluting plants in their neighbourhood, while rising prices of materials and labour added to delays, he said.
"The EU needs an overall strategy to deal with blocked decision-making, protests and the CO2 question," he said at a conference during the E-World trade fair.
Germany had planned to replace 20,000 megawatts of ageing power station capacity up to 2012 alone, but his authority only had knowledge of projects underway for 7,000 MW, Kurth said.Aging power stations need replacing, no doubt about it, but it's not clear the plans are in place. An important contribution to the Oil Drum from Chris Vernon, "Nuclear Britain", showed a daunting scenario with respect to future nuclear generating capacity in the UK. It looked something like this:
The image of falling off a cliff, literally as we speak, seems a powerful one. What lies below? Is there a cushion? Is it simply darkness, impenetrable with our current tools? Does this image not generate a sense of intense insecurity?
The nuclear generation problem is compounded by a looming decline in the quality of uranium ores, and thus a rise in (energy) costs, and a declining EROEI for uranium. On a global view, according to this fact sheet from the Oxford Energy Group (pdf) we can expect the EROEI from nuclear power generation, excluding the energy costs of building and maintaining generating stations and all the other infrastructure, will reach one by about 2070. At that point it will be so difficult to mine a kilogram of uranium that no (energy) profit can be obtained from its use in a power plant. Coincidentally, they also use the image of an "energy cliff".
But the ORG's focus in this project ("Secure Energy") seems less oriented toward the problem of supply, than the problem of "security" under the demands of nuclear energy. That is, as nuclear forms an essential part of Europe's energy mix, its future is assured. Yet nuclear poses its own dangers, not least concerns about "nuclear terrorism" and the links between uranium processing and nuclear weapons proliferation. Thus while seeking to respond to the twin challenges of climate change and energy security, the UK government's Energy Review, "The Energy Challenge", suggests nuclear energy as an essential component. Yet this arm of the "secure energy" agenda generates its own insecurities, both nationally and internationally.The continuing threats toward Iran are a case in point.
Friday, February 8, 2008
Unpacking Energy Security
Let me take a minute to outline what I'm trying to do, which is in essence about figuring out what is meant by “energy security”. Energy security is a concept that is usually taken to mean something like "the assurance of sufficient supplies of energy at affordable prices". A few points here.
One, such a definition already contains a “security” term – assurance. That is, security is about being secure. So what does assurance mean? Certainty, perhaps? Can we be confident in our supply? Do “certain” and “confident” here not mean essentially the same as “secure”? (This circularity is rampant in our language, of course, and does much to generate the nonsense that we put up with in life J. ) Furthermore, are certain, confident, and secure not essentially subjective and emotional terms? They refer to perceptions, expectations, nerves… (The anthropomorphization of the state; do states have feelings? Do they fear, and feel insecure? Do they not-fear?)
More interesting, perhaps: how is that certainty or confidence or absence of fear to be achieved? Through promises from Russia? Via the occupation of Iraq? Perhaps through the elimination of competitors – the destruction of China (or at least, of China’s energy demand)? Policing the pipelines? Guarding the straits? Arming Nigeria? Etc etc etc.
Second is the notion of “sufficient supplies”. But “sufficient” for what? For continued economic growth and consumption? (We’ll allow Albert Bartlett to respond to that one.) Sufficient for business as usual? Sufficient to enable a transition? Sufficient to keep England’s homes warm? Sufficient seems to me to imply “such that things don’t have to change much” – but of course, they do. So is this a useful term? Is it indicative of a fantasy of the viability of the continuity of our way of life?
Again, sufficient FOR WHOM? The World? The USA? Montreal? My family and household? Everyone, or only the rich? 6.5 billion, or 10 billion? Note: at some levels we’re clearly already NOT energy secure. This relates very closely to the question: WHOSE CONCERN IS IT? The “global community”? NATO? The USA? Me?
Finally (?), sufficient FOR HOW LONG? For this electoral cycle? For a century? Until next winter? Or until alternatives (in energy supply, in living, working, and industry) are established? Sufficient to get us through the transition? There is a big question here, regarding the inevitability of transition – in effect, maybe it’s a question of whether our remaining and emerging energy supplies can suffice to keep this going awhile longer, or to power the transition… or can they, in fact, do both? (Let's face it, it's not as if the transition can occur instantaneously... so they have to do both!
Third: “affordable”. Well, again, energy seems barely affordable now for a lot of the world’s people, including many in the homeland who are borrowing money to pay their heating bills. Affordable in that an economy can keep functioning? Affordable for the US army to keep doing its thing, and our cities to maintain operations? Affordable in terms of inputs into energy extraction – i.e., can we afford to go get more (uranium, oil, copper)? Affordable in not requiring militias to maintain public order? (Wait, do we not already rely on them…?)
Clearly, all these factors are interrelated: What, how, how long, for whom…? My research interest is to draw out some of these links, and specifically to relate them to food security, and policies regarding biofuels, farm aid etc. That also relates to what may be the biggest question: WHAT FORM OF ENERGY? Oil and gas, yes. Electricity. But also heat. Mobility. And food. You can’t eat Uranium. And as I recall it’s a bad idea to put sugar in your gas tank.
So what am I trying to do with these questions? I think I’m just trying to hold up a mirror, so that those who use such terms can see what they’re saying, and maybe to help us realize how little we understand about the words we use. And if that helps us through what I see as the certainty of change, all the power to it.
Sunday, February 3, 2008
Michael Klare is perhaps the leading academic currently engaged with "energy security", at least as it pertains to national and military concerns - that is, to traditional conceptions of "security". But "energy security is different. As Klare suggests in a recent article, ES may most readily be seen in terms of "the uninterrupted acquisition of adequate petroleum to satisfy national requirements". In this context we might even afford a quote to G.W. Bush, who refers to the priorities of a new national "strategy", among the goals of which is "to ensure a steady supply of affordable energy for America’s homes and businesses and industries.” (1). That is, energy security is a matter of both supply and price.
It may seem that, in a position of "security", the fact of scarcity is not an issue. Scarcity, of course, will necessarily drive up prices according to supply constraints, and affordability must be relative to various economic factors. Somehow, this mechanism is not to function in an energy secure condition. We might presume that the vision of "security" entails a promise of actual supply not being constrained. This, of course, is (excuse the pun) a pipe-dream. Supply is always constrained by some factors. The "cheapness" of oil in previous years (and even now) is relative: if we can afford oil, it is thereby affordable. But it is by and large less affordable for many than it was three years ago. (And even then, for some, it was not affordable.) Security must clearly be seen as a far more calculated quality, a matter of "more secure", or "less". And of course, "scarcity" too is a relative term. ("There's plenty of oil, so long as you can pay for it.")
Newsweek's Fareed Zakaria, interviewing Frederick Smith (founder of FedEx), who expresses a belief that
The country's continued and increasing dependence on imported petroleum has created an enormous economic and national-security risk probably second only to terrorism and the proliferation of weapons of mass destruction.This "security risk" extends to a threat to both the US Economy and "our national security situation", due especially to price rises. (Fareed Zakaria, "A Marine’s New Mission", NEWSWEEK,
Equally interesting is Smith's attention to the military aspects, and the place of energy in history:
It shouldn't be forgotten that the proximate cause of World War II was the U.S. oil embargo against Japan, when we were an oil-exporting nation. And World War II was largely won in Europe by the United States' attack on the fuel supplies of Germany. In fact, they were making more Messerschmitt fighter planes in late 1944 and early 1945 than anywhere else in the world—they simply didn't have the fuel to train the pilots to fly them. The first gulf war was caused totally by oil—it was Saddam Hussein's insistence that he own certain oilfields that led to his invasion of Kuwait and our ouster of his forces there. The subsequent presence of the United States in the Middle East was in large measure driven by the protection of the oil trade. And a lot of analysts think that as much as 40 percent of the entire U.S. military budget can be attributed to protecting the oil trade.
As Zakaria notes, Smith is a member of the Energy Security Leadership Council, "a group of transportation executives and retired military officers advocating greater American energy independence." The Council's website notes that Smith is in fact co-Chair.
Interesting bunch here. The Council, codenamed SAFE ("Securing America's Future Energy") is composed of a number of transport-oriented businesspersons (FedEx, UPS), and a whole lot of retired military heads. They made headlines in 2005 with a oil-disruption simulation that the Washington Post sat up and noticed:
The United States would be all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets, high-level participants in a war game concluded yesterday. (John Mintz, "Outcome Grim at Oil War Game: Former Officials Fail to Prevent Recession in Mock Energy Crisis", Washington Post Friday, June 24, 2005; Page A19)
Giving evidence to a planning inquiry last October, a senior MoD expert said that the turbines create a hole in radar coverage so that aircraft flying overhead are not detectable. In written evidence, Squadron Leader Chris Breedon said: “This obscuration occurs regardless of the height of the aircraft, of the radar and of the turbine.” He described the discovery as alarming.
(1) Michael Klare, "The Futile Pursuit of 'Energy Security' by Military Force", Brown Journal of World Affairs 13 (1), (Spring/Summer 2007): 139-153.
Saturday, January 26, 2008
Shell Energy Futures: The Scramble and the Blueprints
A recent letter from the CEO of Shell, Jeroen van der Veer, to the company's employees, reproduced at TOD January 25, notes the challenges coming in the future of energy, particularly the two-pronged dilemma: supply and demand, on the one hand, and carbon dioxide emissions, on the other. How is Shell, and indeed the world, going to proceed in the face of these challenges? What are the options for action? Van der Veer paints a picture of two models for the future, which he calls “Scramble” and “Blueprints”.
"In the Scramble scenario, nations rush to secure energy resources for themselves, fearing that energy security is a zero-sum game, with clear winners and losers. The use of local coal and homegrown biofuels increases fast.
Taking the path of least resistance, policymakers pay little attention to curbing energy consumption - until supplies run short. Likewise, despite much rhetoric, greenhouse gas emissions are not seriously addressed until major shocks trigger political reactions. Since these responses are overdue, they are severe and lead to energy price spikes and volatility.
The other route to the future is less painful, even if the start is more disorderly. This Blueprints scenario sees numerous coalitions emerging to take on the challenges of economic development, energy security and environmental pollution through cross-border cooperation.
Much innovation occurs at the local level, as major cities develop links with industry to reduce local emissions. National governments introduce efficiency standards, taxes and other policy instruments to improve the environmental performance of buildings, vehicles and transport fuels.
As calls for harmonization increase, policies converge across the globe….
The world faces a long voyage before it reaches a low-carbon energy system. Companies can suggest possible routes to get there, but governments are in the driving seat. And governments will determine whether we should prepare for a bitter competition or a true team effort."
Hard-nosed realism meets enlightened liberalism, surely: “bitter competition or a true team effort”. As any student of international relations knows, these two scenarios do not cover the range of options for analyzing the situation. Yet they do point to two distinct policy directions, which themselves suggest two quite different futures for global politics. Does peak oil portend a period of resource wars and muddling through, or an era of cooperation in the common interest?
Surely, the future reality is likely to be somewhere between these extremes. Regional energy agreements will generally be easier to construct, and more effective, than global ones. This does not necessarily bode well for world peace, of course. And there is no doubt that even within cooperative arrangements, competition is a fact of politics, and will be a fundamental element of whatever cooperative arrangements are made.
In the interests of opening this up a bit, this blog site will begin a list of nodes for “Energy: The Prospects for Cooperation”. Rather than trying to distinguish regional from global agreements, the entries will indicate the number of states that are party to the agreements.
One intergovernmental agreement worth checking out is the Energy Charter Treaty (www.encharter.org). The ECT seeks to regulate investment and supply issues in the field of energy, with a nod to environmental concerns, especially via efforts to improve “efficiency”. It currently has 52 signatories (EC + 51), and entered into force in 1998. A review was conducted in 2004.
As the ECT Secretary General, André Mernier, noted in a recent speech (Nov 2007):
“With increasing reliance upon internationally traded energy, the rules and disciplines that apply to energy trade are of great strategic significance. Considerations of security of supply/demand and need of investment require predictability and transparency that could be achieved most effectively through a multilateral legal framework. At the same time energy markets and trade are constantly evolving, so it is a real challenge to negotiate multilateral rules for trade in energy.”
As indicated in this speech, the ECT has a working relationship with another group, a London-based “NGO” by the name of the World Energy Council. The WEC has member committees in 94 countries of the world. The mandate of WEC is 'To promote the sustainable supply and use of energy for the greatest benefit of all people'. They have conducted a regular “Survey of Energy Resources” since 1934, which they claim is “the prime global compilation of energy resources and reserves… Other compilers of energy statistics, such as the United Nations and the International Energy Agency, rely on this WEC data.”
We’ll be looking into this further… but my daughter is due to wake up any second…
So, is it or isn't it the peak? Is peak oil "real"?
There are no doubt many who deny that this non-renewable resource will ever run out, and they're no doubt correct. The peak doesn't mean we run out. It means that "supply constraints" cannot be overcome, and that supply will decline. The price of oil will continue to rise, except to the extent that demand pressures are reduced. That may look like a break in prices. in reality it's economic slowdown, for which "supply constraints" must be held responsible (in part, at least).
I get the sense that many class members are reluctant to understand this phenomenon as significant. Of course, peak oil is not quite mainstream. But just the other day the European Union Energy Commissioner, Andris Piebalgs, used the phrase in looking forward to future supply constraints. According to this EurActive article,
"Piebalgs referred to varying predictions about when the oil production peak will be reached, with some experts saying it will be in 20 years and others arguing that the world is already at peak production.
Highlighting the potential gravity of the problem, Piebalgs noted that the oil crisis of the 1970s presented a discrepancy between oil supply and demand of only 5%, but that in a post-peak oil scenario, the gap between supply capacity and demand could widen by 4% annually, leading to a 20% gap within five years."
Sunday, January 20, 2008
This blog is an effort to collect my thoughts, and to maintain a record of the trends as they evolve. It may serve as a template for a book, though for now it's more like a notebook. It will also serve as a supplement to a couple of courses I am currently teaching at Concordia University in Montreal: POLI 394, Globalization and Sustainable Development, and POLI 486J, Energy, Power, Security. I look forward to comments from members of these courses, and from outsiders who may stumble upon these notes.