Marble Composition

Peak Oil and the Wars of the 21st Century

I found this article by Michael Hirsh of Newsweek interesting: "The Energy Wars. The rise of a new global energy elite means high oil and gas prices are here to stay." And not because I learned a lot from it, but because that it appeared at all in a major publication. Let's go through some of it.

President Chavez, sitting atop his growing pile of petrodollars, has gleefully thumbed his nose at Washington’s efforts to rein him in.

This is a minor point, but Chavez has every right to do what he pleases with the oil that sits beneath his country, and the snide comment above comes from the conventional wisdom in Washington that anyone that has energy resources automatically needs to be under the U.S.'s thumb. Onward:

The Bush administration may think it has one trump card in Iraq. U.S. interests obviously lie with the vast proven and potential Iraqi oil fields, said to be the world's largest. The Iraqi oil ministry has signed about 40 memorandums of understanding, many with U.S. companies, according to industry sources. Under them, the majors such as ExxonMobil, Chevron and ConocoPhillips are giving technical advice "free" to the ministry (a typical get-in-the-door strategy for the industry). Challenged at a congressional hearing in March, CENTCOM commander Gen. John Abizaid was frank in suggesting that, while oil was not the reason America went to war, it may provide a critical reason for staying. "The United States and its allies have a vital interest in the oil-rich region," Abizaid said. "Ultimately it comes down to the free flow of goods and resources on which the prosperity of our own nation and everybody else in the world depend." [emphasis mine]

Isn't that a shocker. I honestly appreciate it the General's frankness. I think we did go to war in part because of oil, but not in the let's-make-our-buddies-rich way. It was a way of making sure the U.S. has a big say in how the last remaining supplies of oil get divied up in the next decade or so, especially when the world passes peak production. Again, that was only part of the reason the U.S. went in. You can almost hear this oil man drooling:

"The Iraqi oil belongs to the Iraqi people. If the Iraqi people determine that they want the help of international oil companies in developing their resources, then ExxonMobil would certainly be interested in participating."

Here's what I found shocking, and this is coming from a friend of Dick Cheney's, and a former Reagan administration official:

"Worldwide production will peak. The result will be skyrocketing prices, with a huge, sustained economic shock. Jobs will be lost. Without action, the crisis will certainly bring energy rivalries, if not energy wars. Vast wealth will be shifted, probably away from the U.S. For the last 20 years, U.S. policy has discouraged production and encouraged consumption. If we dither any more, we will pay a terrible price, the economic equivalent of a Category 5 hurricane. Katrina was Category 4."

This isn't the crazy blogger FuzzFinger saying oil production will peak, this is a Republican official saying it. The wars of this century will be fought over what's left of the dwindling supplies of oil, and if you put the Iraq War in the that context, these wars have already begun.

It's a pretty good article, and I'd recommend checking it out. There's some good information on Russia in there as well.

posted by FuzzFinger @ 5/05/2006 03:51:00 PM