Why The Oil Crisis Is Different This Time

"....the number of major new oil fields discovered around the world fell to zero
for the first time in 2003, despite an obvious increase in technological expertise."
Is the world's oil running out fast?
BBC Online, 7 June 2004

"We now consume six barrels of oil for every new barrel we discover. Major oil finds (of over 500m barrels) peaked in 1964. In 2000, there were 13 such discoveries, in 2001 six, in 2002 two and in 2003 none."
Break out the bicycles
Guardian, 8 June 2004

US Vice President Dick Cheney And Pentagon Defence Policy Board Member James Woolsey
Were Two Of The Key Promoters Of The Invasion Of Iraq In 2003
So What Do They Have To Say About 'Peak Oil' ?

"For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously in control of about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."
Dick Cheney, Chief Executive of Halliburton, now Vice President of the United States
Speech at London Institute of Petroleum, Autumn Lunch 1999

"Oil is unique in that it is so strategic in nature. We are not talking about soapflakes or leisurewear here. Energy is truly fundamental to the world's economy. The [1991] Gulf War was a reflection of that reality."
Dick Cheney, Chief Executive of Halliburton, now Vice President of the United States
Speech at London Institute of Petroleum, Autumn Lunch 1999

"Optimists about world oil reserves, such as the Department of Energy, are getting increasingly lonely. The International Energy Agency now says that world production outside the Middle Eastern Organization of Petroleum Exporting Countries (opec) will peak in 1999 and world production overall will peak between 2010 and 2020. This projection is supported by influential recent articles in Science and Scientific American. Some knowledgeable academic and industry voices put the date that world production will peak even sooner—within the next five or six years. The optimists who project large reserve quantities of over one trillion barrels tend to base their numbers on one of three things: inclusion of heavy oil and tar sands, the exploitation of which will entail huge economic and environmental costs; puffery by opec nations lobbying for higher production quotas within the cartel; or assumptions about new drilling technologies that may accelerate production but are unlikely to expand reserves. Once production peaks, even though exhaustion of world reserves will still be many years away, prices will begin to rise sharply. This trend will be exacerbated by increased demand in the developing world....."
Richard G. Lugar and R. James Woolsey (Former Director of the CIA)
The New Petroleum - Foreign Affairs January/February 1999

"Energy is vital to a country's security and material well-being. A state unable to provide its people with adequate energy supplies or desiring added leverage over other people often resorts to force. Consider Saddam Hussein's 1990 invasion of Kuwait, driven by his desire to control more of the world's oil reserves, and the international response to this threat. The underlying goal of the U.N. force [in the 1991 Gulf war], which included 500,000 American troops, was to ensure continued and unfettered access to petroleum...."
Richard G. Lugar and R. James Woolsey (Former Director of the CIA)
The New Petroleum - Foreign Affairs January/February 1999

"But the age of cheap oil is over. If you doubt this, take a look at the BBC's online report yesterday of a conference run by the Association for the Study of Peak Oil. The reporter spoke to the chief economist of the International Energy Agency, Fatih Birol. 'In public, Mr Birol denied that supply would not be able to meet rising demand ... But after his speech he seemed to change his tune: 'For the time being there is no spare capacity. But we expect demand to increase by the fourth quarter by 3m barrels a day. If Saudi does not increase supply by 3m barrels a day by the end of the year we will face, how can I say this, it will be very difficult. We will have difficult times.' The reporter asked him whether such a growth in supply was possible, or simply wishful thinking. 'You are from the press?' Birol replied. 'This is not for the press.' So the BBC asked the other delegates what they thought of the prospects of a 30% increase in Saudi production. 'The answers were unambiguous: 'absolutely out of the question'; 'completely impossible'; and '3m barrels - never, not even 300,000'. One delegate laughed so hard he had to support himself on a table.' And this was before they heard that two BBC journalists had been gunned down in Riyadh. The world's problem is as follows. We now consume six barrels of oil for every new barrel we discover. Major oil finds (of over 500m barrels) peaked in 1964. In 2000, there were 13 such discoveries, in 2001 six, in 2002 two and in 2003 none. Three major new projects will come onstream in 2007 and three in 2008. For the following years, none have yet been scheduled."
Break out the bicycles
Guardian, 8 June 2004

Is the world's oil running out fast? - BBC report on 'Peak Oil' Conference - Berlin, June 2004

"Saddam Hussein sits and smiles as the price of his oil - as well as that of his neighbors' (which, he doubtless believes, he may again be able to seize) -- skyrockets, giving him more to spend on his military forces, including longer range ballistic missiles and weapons of mass destruction. He can be confident that within the next decade or two - the period during which most independent assessments of reserves suggest that world petroleum production will begin to decline - the world's sharply increasing demand for petroleum will increasingly have to be satisfied by him and his neighbors, to their great profit.... Although all these serious [economic, environmental and social] problems may at first seem unconnected, Mr. Chairman, they in fact all have essentially the same cause - over-dependence by the rest of the world on petroleum-derived products that will increasingly have to come from the very troubled and unstable Middle East."
James Woolsey, former Director of the CIA
Statement to Committee on Agriculture, Nutrition and Forestry, Unites States Senate, 11 April 2000

James Woolsey - Ex-CIA Chief Predicted 'Peak' Oil Crisis In 1999 CFR Paper - 23 May 2004

"For the first time, spare capacity is starting to become an issue. It means that Opec's real power is moving back to the Middle East."
Julian Lee, of the Centre for Global Energy Studies
London Times, 25 May 2004

"Iraq can be seen as the first battle of the fourth world war. After two hot world wars and one cold one that all began and were centered in Europe, the fourth world war is going to be for the Middle East."
Former Director of the CIA, James Woolsey
NATO conference, Prague, November 2002

"Opec, the 11-nation cartel of oil exporting states, meets in Beirut this week and is expected to agree to boost production levels by enough to make a 'psychological impact' in an attempt to bring prices down. Chancellor Gordon Brown speaking for the G7 nations in New York last week effectively begged for just such action."
Oil; It Powers the World's Economies ... But Unrest in Saudi Is Fuelling Fears It Could Also Destroy
Sunday Herald, 31 May 2004

"The oil price surged to new heights yesterday as market speculators tested Saudi Arabia's ability to bring the rampaging crude oil price under control.... Guy Caruso, head of the US Energy Information Administration, predicted that US oil prices would remain high and expressed doubts that the extra oil promised by Ali al-Naimi, the Saudi Oil Minister, would be enough to meet burgeoning demand.... Julian Lee, of the Centre for Global Energy Studies, reckons that extra oil from Saudi Arabia will have little impact on the acute petrol shortage in the United States. 'It will take the best part of two months to get it to the US, to refine it and get it to petrol pumps.'.... Mr Lee sees a shift in the balance of power. 'For the first time, spare capacity is starting to become an issue. It means that Opec's real power is moving back to the Middle East.'"
Crude prices surge near to 21-year high
London Times, 25 May 2004

"According to an April 29, 2002 report in Britain's Guardian, ARAMCO [Arab American Oil Company] constitutes 12% of the world's total oil production; a figure which has certainly increased as other countries have progressed deeper into irreversible decline. ARAMCO is the largest oil group in the world, a state-owned Saudi company in partnership with four major US oil companies. Another one of Aramco’s partners is Chevron-Texaco which gave up one of its board members, Condoleezza Rice, when she became the National Security Advisor to George Bush. All of ARAMCO’s key decisions are made by the Saudi royal family while US oil expertise, personnel and technology keeps the cash coming in and the oil going out. ARAMCO operates, manages, and maintains virtually all Saudi oil fields – 25% of all the oil on the planet.... According to a New York Times report on March 8th of this year, ARAMCO is planning to make a 25% investment in a new and badly needed refinery to produce gasoline. The remaining 75% ownership of the refinery will go to the only nation that is quickly becoming America's major world competitor for ever-diminishing supplies of oil: China.... One of the most important intelligence prizes today - especially after recent stories in major outlets like the New York Times reporting that Saudi oil production has peaked and gone into irreversible decline - would be to know of a certainty whether those reports are correct. The Saudis are denying it vehemently but they are being strongly refuted by an increasing amount of hard data. The truth remains unproven. But the mere possibility has set the world's financial markets on edge. Saudi Oil Minister Ali Naimi came to Washington on April 27th to put out the fires. It was imperative that he calm everybody's nerves as the markets were screaming, 'Say it ain't so!' Naimi said emphatically that there was nothing to worry about concerning either Saudi reserves or ARAMCO's ability to increase production. There was plenty of oil and no need for concern. FTW covered and reported on that event. Writer and energy expert Julian Darley noted that there were some very important ears in the room, listening very closely. He also noted that Naimi's 'scientific' data and promises of large future discoveries did not sit well many who are well versed in oil production and delivery. If anybody has the real data on Saudi fields it is either ARAMCO or the highest levels of the Saudi royal family. The answer to the Saudi peak question will determine whether Saudi Arabia really can increase production quickly, as promised. If they can't, then the US economy is going to suffer bitterly, and it is certain that the Saudi monarchy will collapse into chaos....So far the Saudis haven't had to prove that they could increase production due to convenient terror attacks at oil fields, and more 'debates' within OPEC. "
Coup D'Etat: The Real Reason Tenet and Pavitt Resigned from the CIA on June 3rd and 4th
'From The Wilderness Publications', 8 June 2004

Oil, God and Gold: The Story of Aramco and the Saudi Kings by Anthony Cave Brown - Click Here

"As Shell has demonstrated, we don't really know how much oil is out there. If we can't trust Shell's accounting, what about the Saudis? OPEC's reserve figures have long been suspected of being subject to political inflation. We may not be sure how much is left but we do know we want to use more. Globally it is estimated that the use of oil will rise by 50% in the next 20 years. Much of that extra demand will come from India and China. Just as America seems to be moving against gas guzzlers, new (sub) continents of consumers are coming on line."
On Wall Street: Dominic Rushe: The only way is up for oil prices
London Times, 23 May 2004

"The reserves scandal that has been dogging Shell all year was back on centre stage yesterday as the company downgraded its figures for the fourth time.....This brings the total of reserves restated since the start of 2004 to 4.47bn barrels, and means the group's replacement ratio last year was 63 per cent."
Shell Forced To Make Fourth Downgrade
Guardian, 25 May 2004

"In 1973, the year of the first oil price crisis, the omens were never very auspicious. Donny Osmond was in the charts. The White House was mired in Watergate. Israel was fighting the Arabs. And Edward Heath was fretting in Downing Street as strikes beset the mines, railways and power stations. Against that background, Opec flexed its muscles. Arab members, angry at western support for Israel in the Yom Kippur war, imposed an embargo on supplies then pushed up prices. That November the Tory government announced it was printing 16m petrol rationing books. The crisis was so serious that senior figures in the US administration considered invading Saudi Arabia to secure the oilfields. British intelligence chiefs, according to government records released only last January, feared America would ask the UK to help. Sound worryingly familiar?"
Focus: Over a barrel
London Times, 23 May 2004

"Saudi [has] promised to boost its output to 9.1 million barrels a day in an effort to stem record prices. The offer came just hours after the G7 group of rich states called for lower oil prices....Analysts have voiced fears that Saudi's increase would be unable to meet surging global demand. ...The [OPEC] cartel - which supplies about a third of the world's oil - targets daily output of 23.5 million barrels per day, but members are already pumping out an extra two million barrels a day - the equivalent of 2.5% of global demand. As a result, any Opec increase would largely be met by Saudi Arabia as most other members now have very little spare capacity. Analysts have also begun to fret that any additional oil will not hit the market in time, as the Saudi plans require the introduction of new oilfields. Marshall Steeves, energy market analyst at Refco, said: 'There is scepticism perhaps that the Saudis can increase production as much as they claim'.... Other experts argued that any future increase by Opec would simply be gobbled up by rising global demand - driven by a healthier US economy and rapid growth in China."
Oil price soars despite Saudi vow
London, 24 May 2004

"In the 1970s and early 1980s, the oil shocks were caused by the oil sheikhs. The first cut in production was motivated by the Arab reaction to defeat in the war of Yom Kippur in 1973. Arab Opec cut its production to penalise the Western countries for their support of Israel...... This year, for the first time, the oil shock, though a milder one, has come from the demand rather than the supply side. Opec could indeed produce the extra couple of a million barrels, and the non-Opec countries could produce their extra barrels, but total world capacity is now uncomfortably close to current demand. Extra investment and the exploitation of higher-cost oils can produce a larger supply, but it would need both time and money. The G8 countries continue to consume huge quantities of oil, but it is China which is the new factor..... China is becoming a normal advanced industrial society, but an industrial society of more than one billion people. The advanced industrial countries of the existing order, the G8 countries - America, Britain, Japan, Germany, France, Italy, Canada and Russia - are about to be joined by G9, China. In rough terms, China will have the population of all the old G8 put together. China already uses nearly 30 per cent of world steel and 40 per cent of world cement. How is China's demand for oil to be fitted into a limited world supply? There are four sides to this balance of trade: money, oil, China and the US. The US runs a $500 billion deficit with the rest of the world, financed by foreign borrowing, particularly from Japan and China; this deficit is largely spent on importing cheap manufactured goods from Asia, particularly from China; China uses the money paid by the United States to buy the commodities, including oil, which are needed for Chinese development.... this quadrilateral trade depends on the stability of each of its sides. In itself, Chinese manufacturing growth is probably the most secure, but China depends on the availability of commodities, particularly oil, and on the continued strength of US demand for Chinese products. The US depends on oil, at a reasonable price, and on money. If the Boston analysts prove correct, and oil prices and interest rates are destined to rise, that will be a double threat to the American economy, a threat therefore to China, and potentially to the structure of world trade. It is in Washington that the potential fragility of the structure is seen most clearly because the Americans have to defend it. In geopolitical terms, Washington is not willing to tolerate hostile governments in the two largest Arab Opec countries, Saudi Arabia and Iraq...."
As China gets motoring, will the pumps run dry?
London Times, 24 May 2004

"The solution to America's dependence on foreign oil, and especially on oil from the increasingly threatened Saudi royal family, does not lie in anything the administration proposes. It lies, instead, in making imported oil more expensive, thereby discouraging demand for it and encouraging the development of alternative sources of supply and new technologies. But making imported oil still more expensive is not considered as great a vote winner as encouraging fantasies about the SPR (Democrats), pressing for more drilling in Alaska (Republicans), or relying on the Saudis to keep their word about prices (the IEA). If Bush had the nerve to tax imports, motorists' dollars would flow into America's treasury rather than those of Opec. But this is just too sensible to be considered in an election year."
American Account: Irwin Stelzer: Politicians go for fantasy not action as oil price soars
London Times, 23 May 2004

London Times - 26 January 2004
World's Top Ten Oil Companies
Unable To Replenish Reserves
www.btinternet.com/~nlpwessex/Documents/oilsectorfailstoreplenishreserves.htm
Sector Finding Less Oil - Pull Outs Anticipated

"The United States cannot afford to wait for the next energy crisis to marshal its intellectual and industrial resources.... Our growing dependence on increasingly scarce Middle Eastern oil is a fool's game—there is no way for the rest of the world to win. Our losses may come suddenly through war, steadily through price increases, agonizingly through developing-nation poverty, relentlessly through climate change—or through all of the above."
James Woolsey, US Director of Central Intelligence, 1993 - 1995
Bush II Administration Adviser and Envoy, 2001 - Present

James Woolsey - Ex-CIA Chief Predicted 'Peak' Oil Crisis In 1999 CFR Paper - 23 May 2004

"Our industry can certainly be proud of its past achievements. Yet the challenges we will face in the coming years will be every bit as great as those encountered in the past, due in part to ever-increasing global energy use. For example, we estimate that world oil and gas production from existing fields is declining at an average rate of about 4 to 6 percent a year. To meet projected demand in 2015, the industry will have to add about 100 million oil-equivalent barrels a day of new production. That's equal to about 80 percent of today's production level. In other words, by 2015, we will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every 10 barrels being produced today."
John Thompson, President of ExxonMobil, the world's largest oil company
The Lamp (published for ExxonMobil shareholders), 2003, Vol. 85 No.1

Graph from ExxonMobil report 4 February 2004, p4 (2004 marker added for illustration)
'A Report on Energy Trends, Greenhouse Gas Emissions, and Alternative Energy'

"We must not be prisoners of our own time. The horrific terrorist attack in Bali, the attack on the French tanker off Yemen the other week - these threats are coming at the world from all directions....And you can't continue.... to just keep erecting security and defence barriers all around you..... We have a way of life, a set of [energy] consumption patterns, that are going to have to change - all of us. We have to recognise that without a major shift in the whole way we organise ourselves, our pattern of life is simply not sustainable."
Peter Hain, UK Minister for Europe
Mid-East oil 'too costly' for Europe
BBC Online, 17 Oct 2002

Alternative Energy Technology
As An Alternative To Permanent War

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