Fw: Bush energy adviser calls oil crisis desperate

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Thursday, October 14, 2004 5:59 PM

Bush energy adviser calls oil crisis " desperate "

 

Life After the Oil Crash

 

" Deal with Reality, or Reality will Deal with You "

 

" Are you ready for $7 per gallon gas, $182 per barrel oil, 50 percent yearly

inflation, total economic collapse, unending resource wars, and a large-scale

reinstitution of the military draft? "

 

 

Dear Reader,

 

Civilization as we know it is coming to an end soon. This is not the wacky

proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy

theory society. Rather, it is the scientific conclusion of the best paid, most

widely respected geologists, physicists, and investment bankers in the world.

These are rational, professional, conservative individuals who are absolutely

terrified by a phenomenon known as global " Peak Oil. "

 

The situation is so dire, even George W. Bush's Energy Adviser, Matthew Simmons,

has acknowledged " The situation is desperate. This is the world's biggest

serious question. "

 

Simmons is no environmentalist fearmonger. He's a self-described " lifelong

Republican " who has donated generously to Republican political campaigns. His

investment bank, Simmons and Company International, is considered the most

reputable and reliable energy investment bank in the world.

 

Given Simmons' background, what he has to say about the situation is truly

terrifying. For instance, in an August 2003 interview with From the Wilderness

publisher Michael Ruppert, Simmons was asked if it was time for Peak Oil to

become part of the public policy debate. He responded:

 

" It is past time. As I have said, the experts and politicians have no Plan B to

fall back on. If energy peaks, particularly while 5 of the world's 6.5 billion

people have little or no use of modern energy, it will be a tremendous jolt to

our economic well-being and to our health - greater than anyone could ever

imagine. "

 

When asked if there is a solution to the impending natural gas crisis, Simmons

responded:

 

" I don't think there is one. The solution is to pray. Under the best of

circumstances, if all prayers are answered there will be no crisis for maybe two

years. After that it's a certainty. "

 

In May 2004, Simmons explained that in order for demand to be appropriately

controlled, the price of oil would have to reach $182 per barrel. With oil

prices at $182 per barrel, gas prices would likely rise to $7.00 per gallon.

 

To put Simmons' statements in perspective, consider the fact Osama Bin-Laden

believes $200 to be the fair price for a barrel of oil. The phrase, " Politics

makes strange bedfellows, " doesn't quite do this one justice.

 

Simmons isn't the only member of the Bush team extraordinarily concerned about

Peak Oil. In late 1999, Dick Cheney stated:

 

" By some estimates, there will be an average of two-percent annual growth in

global oil demand over the years ahead, along with, conservatively, a

three-percent natural decline in production from existing reserves. "

 

Cheney ended on an alarming note, " That means by 2010 we will need on the order

of an additional 50 million barrels a day. " This is six times the amount

produced by Saudi Arabia, the world's leading oil producer.

 

A report commissioned by Cheney and released in April 2001 was no less

disturbing:

 

" The most significant difference between now and a decade ago is the

extraordinarily rapid erosion of spare capacities at critical segments of energy

chains. Today, shortfalls appear to be endemic. Among the most extraordinary of

these losses of spare capacity is in the oil arena. "

 

In May 2001, George W. Bush himself stated, " What people need to hear loud and

clear is that we're running out of energy in America. "

 

Life After the Oil Crash

 

" Deal with Reality, or Reality will Deal with You "

 

It's not just members of the Bush Administration who are worried about the

ramifications of the oil shocks. In his most recent book, Dude, Where's My

Country?, Michael Moore dedicates an entire chapter, " Oil's Well That Ends Well "

to the unprecedented suffering the industrialized world will soon endure if

people don't wake up to the reality of Peak Oil.

 

On a similar note, in a recent issue of the Financial Times, former UK

environmental minister Michael Meacher stated, " It's hard to envisage the

effects of a radically reduced oil supply on a modern economy or society. The

implications are mind-blowing. "

 

Even the Saudis have acknowledged the scope of the coming crisis. Publicly, they

make dubious assertions the kingdom can meet the world's oil needs for decades

to come. Privately, they sing a different tune. They have a saying that goes,

" My father rode a camel. I drive a car. My son flies a jet-airplane. His son

will ride a camel. "

 

Anytime George W. Bush, his energy advisor, Dick Cheney, and the Saudis are in

complete agreement with Michael Moore and a high ranking environmentalist, it's

safe to say the sh_t has hit the fan.

 

The issue is not one of " running out " so much as it is not having enough to keep

our economy running. In this regard, the ramifications of Peak Oil for our

civilization are simliar to the ramifications of dehydration for the human body.

The human body is 70 percent water. The body of a 200 pound man thus holds 140

pounds of water. Because water is so crucial to everything the human body does,

the man doesn't need to lose all 140 pounds of water weight before collapsing

due to dehyrdration. A loss of as little as 10-15 pounds of water may be enough

to kill him.

 

 

In a similiar sense, an oil-based economy such as ours doesn't have to deplete

its entire reserves of oil before it begins to collapse. Once the shortfall

between demand and supply gets beyond 10-15 percent, all hell is going to break

lose.

 

To understand the nature of the coming crisis, you need to understand what

geologists called the " Hubbert Peak, " named for the Shell geologist Dr. Marion

King Hubbert who in 1956 accurately predicted that US domestic oil production

would peak in 1970.

 

All oil production follows a bell curve, whether in an individual field, a

country, or on the planet as a whole.

 

 

Oil is increasingly plentiful on the upslope of the bell curve, increasingly

scarce and expensive on the down slope. The peak of the curve coincides with the

point at which the endowment of oil has been 50 percent depleted. Once the peak

is passed, oil production begins to go down while cost begins to go up.

 

 

In practical and considerably oversimplified terms, this means that if 2000 was

the year of global Peak Oil, worldwide oil production in the year 2020 will be

the same as it was in 1980. However, the world's population in 2020 will be both

much larger (approximately twice) and much more industrialized (oil-dependent)

than it was in 1980. Consequently, worldwide demand for oil will outpace

worldwide production of oil by a significant margin. As any economist will tell

you, when demand outstrips supply, the price will zoom.

 

 

Yes, far worse. The oil shock of 1979, for instance, occurred when Iran cut its

oil production by 1 million barrels per day, creating a shortfall in the world's

oil supply of less than five percent. This was enough to send the world economy

into a severe recession.

 

Luckily, at the time, there were other swing producers such as Venezuela who

stepped in to alleviate the crisis. Once world production peaks, however, there

won't be any swing producers to turn to. The crisis will not be alleviated. It

will just get worse with each passing year.

 

Furthermore, the coming shortfall in oil supply will eclipse the shortfalls seen

during the politically-created oil shocks of the 1970's.

 

According to conservative estimates, once we pass the peak, oil production will

decline by 1.5-3 percent per year. However, the decline is more likely to be

over 5 percent per year. The reserves in the world's super-giant and giant

oilfields, for instance, are already dwindling at an average rate of 4-6 percent

a year.

 

Many countries are seeing their oil production drop at an even faster rate. For

instance, Gabon, whose production peaked in 1996, saw its production drop by an

alarming 18 percent last year. Australia saw its production drop more than 14

percent in 2003, while UK production from the North Sea declined by 9 percent,

and Indonesia (an OPEC country) saw its production drop by 8.5 percent.

 

This means that within 10 short years of the peak, a drop in global oil

production of 40-60 percent is not completely out of the realm of possibility.

If we're extraordinarily lucky, and all current trends are bucked, production

may drop by only 25 percent in the 10 years following the peak. This is still an

absolutely huge amount given the importance of oil to the world economy.

 

 

The effects of the physical drop in production will almost certainly be

exacerbated by disruptions in supply resulting from war and terrorism, as an

increasing percentage of the world's oil supply will be coming from unstable

countries like Iraq, Iran, Saudi Arabia, and Nigeria.

 

Within the next 4-8 years, the price is likely to soar into the $100-$200 range.

As a result, oil companies will be motivated to find and extract what little

recoverable oil is left. For a while, their efforts will be successful, and the

world economy will stumble along the bumpy " petroleum-plateau. "

 

Unfortunately, this final frenzy or exploration and extraction will deplete the

world's oil reserves faster than anyone anticipated. Consequently, the second

half of the oil production bell curve will resemble a cliff. As production

plummets, prices will soar into the $200-$400-per-barrel range. Massive

dislocations in the world economy will erupt, giving way to resource conflicts

unlike anything we have ever imagined.

 

Not really. The ability of renewable energy to replace oil is based more in myth

and fantasy than science and reality.

 

Oil has had an Energy Profit Ratio as high as 100 to 1. This means it takes one

unit of energy to produce 100 units. None of the alternatives have EPR's that

even approach that of oil. Some of the alternatives, such as Hydrogen are energy

losers, while others, such as biodiesel, barely break even.

 

The problem with these alternatives is not one of technical feasibility. They do

work. The problem is they do not work anywhere near as well as oil. Even in the

best of circumstances, they cannot produce anywhere near enough net energy to

fuel even a fraction of our current oil-powered economy.

 

The world currently uses 30 billion barrels of oil per year. To keep the economy

moving along, we need about an additional one billion barrels per year.

 

If we get tremendous political will, unprecedented bipartisan and international

cooperation, massive financial investment, and a dozen or so major technological

breakthroughts, we might be able to get the energy equivalent of three to five

billion barrels per year from alternative sources by 2025-2050.

 

Three to five billion barrels of oil is a tremendous amount of energy - about

the amount the entire world used per year during the early years of World War

II.

 

Unfortunately, because of our massive and constantly increasing demand for the

stuff, the energy equivalent of three to five billion barrels of oil is just a

" drop in the bucket. "

 

Furthermore, almost every advocate of alternative energy fails to realize two

absolutely key points:

 

1. It takes a tremendous amount of oil to build alternatives to oil suchas

solar panels, windmills, and nuclear power plants.

 

2. It would take even more oil to retrofit our multi-trillion dollar, fossil

fuel based infrastructure to run on these alternative sources of energy.

 

Unfortunately, it is not that simple. We have a multi-trillion dollar

infrastructure powered almost exclusively by fossil-fuels. Cars, trucks, roads,

boats, docks, airplanes, airports, hospitals, schools, farms, manufacturing

plants, food processing centers, water treatment plants - all run on fossil

fuels. All plastics, pesticides, and fertilizers are derived from fossil fuels.

 

You can't just retrofit the entire economy, or even significant parts of it, to

run on an entirely different source of fuel.

 

Furthermore, the emergence of a truly viable alternative to oil would be an

absolute nightmare for the US economy.

 

The US dollar is the reserve currency for all oil transactions in the world -

hence the term " petrodollar. " This means that whenever oil is bought and sold -

anywhere in the world, by anyone - the money exchanged circulates into the US

economy. The strength of the US economy is directly tied to the strength of the

petrodollar.

 

If a truly viable alternative to oil was to emerge, and the nations of the world

began to use it, the petrodollar would collapse.

 

This would drive the US economy straight into a brick wall and force the US into

a series of " currency wars. "

 

Not without instituting a complete financial meltdown. The reason is simple: we

have an economy mired in debt: corporate debt, government debt, and consumer

debt are all at record levels. In order to finance debt, you need economic

growth. Economic growth requires a constantly increasing consumption of consumer

goods - most of which are made from plastic, which comes from petroleum (oil)

and are delivered by trucks, which consume diesel fuel (oil).

 

A truly successful conservation program would require us to drastically cut our

consumption of consumer goods, which would halt economic growth dead in its

tracks. This would cause indebted corporations, governments, and individuals to

all slide towards bankruptcy. Banks would call in outstanding debts, businesses

would close, government services would cease, and people would lose their jobs.

The Great Depression would begin to look like the " good old days. "

 

Yes. We can't invent or conserve our way out of this. As far as the US

government is concerned, this leaves us with one option: fight and die for every

last drop.

 

A report commissioned by Dick Cheney and released in April 2001 outlined the US

plan to deal with the coming oil shortages. As the Sunday Herlad reported:

 

" The report explained that the 'central dilemma' for the US administration is

that 'the American people continue to demand plentiful and cheap energy without

sacrifice or inconvenience.' It warned that the US is running out of oil, with a

painful end to cheap fuel already in sight. "

 

" It argued that the 'United States remains a prisoner of its energy dilemma,'

and that one of the 'consequences' of this is a 'need for military intervention "

to secure its oil supply.' "

 

The level of military intervention necessary to secure the quantity of oil we

need will require a large-scale reinstitution of the military draft.

 

To this end, the Pentagon has already posted a notice on its website asking for

" men and women in the community who might be willing to serve as members of a

local draft board. " A process the military calls " Draft-Creep " is already

underway. Several proposals to reinstate the draft are currently circulating in

Congress. In addition, the Director of the Selective Service has proposed the

draft be expanded to include all men and women ages18-34.

 

The fact that a large-scale military draft is planned for the Fall of 2005 has

now been confirmed by the ultra-conservative website NewsMax.com.

 

Unfortunately, electing John Kerry won't stop the draft. He has all but promised

to reinstate the draft if elected president.

 

Without an abundant supply of cheap energy, transportation and food delivery

systems will break down. Electrical grids will collapse. Unemployment levels

will skyrocket. Consumer goods will only be available to the super-rich. Food

and water will become desperately sought after commodities. Riots and urban

uprisings will become common.

 

Ultimately, the government may have no choice but to implement some of the more

draconian provisions of the Patriot Act and related legislation in hopes of

maintaining order.

 

When you're done looking through this site, I encourage you to do a google

search for " Peak Oil, " in addition to reading the links I've provided throughout

this page.

 

You will find, much to your dismay as well as my own, that everything on this

site is backed up by reputable sources, hard science, and undeniable fact.

 

Furthermore, you don't need to go further than the morning paper or nightly news

to see the predictions of Peak Oil " doomsayers " coming true at a disturbingly

rapid rate. The crash is already under way and you are running out of time to

get informed.

 

Sincerely,

 

Matt Savinar

 

Last Updated: 9/29/2004