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Out of oil!

We are now using more oil than can be produced, there is no more to “tap”.

The Saudis have a saying “My father rode a camel, I drive a car, my son rides in a jet airplane – his son will ride a camel.”

Alternative! We are an inventive people, so lets get with it. We can develop alternative sources of energy, using solar, wind, water which are efficient. This could lift our ailing economy out of the doldrums, provide employment. When the last person is killed, the land ravished, and no oil left, we won't have gained a thing. We could use serious I&R to force our States to take hard looks at this matter. We must also move to address the out of control Federal government. Check out the Doing Gov I&R icon above. eggy

 

We will experience a decline in available energy, and there will be little left in ten years. At that time, electricity to pump water, sewer, heat, refrigeration, travel, will end as we know it. We must prepare to sustain ourselves. The future will require much hand labor to grow food and provide needed services.

 

1. This is the “Yearly Effect” which has been extensively researched and our energy projected.
2. Beyond Petroleum “Oil” companies now are moving to other ways of providing energy. Why?
3. Byrd on Energy
4. Canadians ARE in the cold

 

Fifty years ago, this was predicted. We were warned, but failed to heed the significance

The Six Nation Confederacy decided that all decisions would take into consideration how it would effect the seven generations to come. Looking ahead only a decade, I can see we have failed to do this. The decrease in energy could have a disastrous effect on the people. It is long past time to discuss the coming time of little or no petroleum energy. People need hope! This is not the end of the world, but a major shift. People had a good life before energy, they could have a good life after the ‘industrial period’.

 

Abstract:  Petroleum geologists have known for 50 years that global oil production would "peak" and begin its inevitable decline within a decade of the year 2000.  Moreover, no renewable energy systems have the potential to generate more than a tiny fraction of the power now being generated by fossil fuels.
In short, the end of oil signals the end of civilization, as we know it.

For an explanation of the above graphic, see http://dieoff.com/page224.htm

SYNOPSIS
by Jay Hanson, Nov, 27, 2000 -- http://www.dieoff.org

"What becomes of the surplus of human life? It is either, 1st. destroyed by infanticide, as among the Chinese and Lacedemonians; or 2d. it is stifled or starved, as among other nations whose population is commensurate to its food; or 3d. it is consumed by wars and endemic diseases; or 4th. it overflows, by emigration, to places where a surplus of food is attainable."
-- James Madison, 1791

 

Notes: (1) 1930 => Industrial Civilization began when (ê) reached 30% of its peak value. (2) 1979 => ê reached its peak value of 11.15 boe/c. (3) 1999 => The end of cheap oil. (4) 2000 => Start of the "Jerusalem Jihad". (5) 2006 => Predicted peak of world oil production (Figure 1, this paper). (6) 2008 => The OPEC crossover event (Figure 1). (7) 2012 => Permanent blackouts occur worldwide. (8) 2030 => Industrial Civilization ends when ê falls to its 1930 value. (9) Observe that there are three intervals of decline in the Olduvai schema: slope, slide and cliff — each steeper than the previous. (10) The small cartoons stress that electricity is the essential end-use energy for Industrial Civilization.

 

Figure 4 shows the complete Olduvai curve from 1930 to 2030. Historic data appears from 1930 to 1999 and hypothetical values from 2000 to 2030. These 100 years are labeled "Industrial Civilization." The curve and the events together constitute the "Olduvai schema." Observe that the overall curve has a pulse-like waveform — namely overshoot and collapse. Eight key energy events define the Olduvai schema.

 

Eight Events: The 1st event in 1930 (see Note 1, Figure 4) marks the beginning of Industrial Civilization when ê reached 3.32 boe/c. This is the "leading 30% point", a standard way to define the duration of a pulse. The 2nd event in 1979 (Note 2) marks the all-time peak of world energy production per capita when ê reached 11.15 boe/c. The 3rd event in 1999 (Note 3) marks the end of cheap oil. The 4th event on September 28, 2000 (Note 4) marks the eruption of violence in the Middle East — i.e. the "Jerusalem Jihad". Moreover, the "JJ" marks the end of the Olduvai "slope" wherein ê declined at 0.33 %/year from 1979 to 1999.

 

Next in Figure 4 we come the future intervals in the Olduvai schema. The Olduvai "slide", the first of the future intervals, begins in 2000 with the escalating warfare in the Middle East. The 5th event in 2006 (Note 5) marks the all-time peak of world oil production (Figure 1, this paper). The 6th event in 2008 (Note 6) marks the OPEC crossover event when the 11 OPEC nations produce 51% of the world's oil and control nearly 100% of the world's oil exports. The year 2011 marks the end of the Olduvai slide, wherein ê declines at 0.67 %/year from 2000 to 2011.

 

The "cliff" is the final interval in the Olduvai schema. It begins with the 7th event in 2012 (Note 7) when an epidemic of permanent blackouts spreads worldwide, i.e. first there are waves of brownouts and temporary blackouts, then finally the electric power networks themselves expire. The 8th event in 2030 (Note 8) marks the fall of world energy production (use) per capita to the 1930 level (Figure 4). This is the lagging 30% point when Industrial Civilization has become history. The average rate of decline of ê is 5.44 %/year from 2012 to 2030.

 

 

The power shortages in California and elsewhere are the product of the nation's long economic boom, the increasing use of energy-guzzling computer devices, population growth and a slowdown in new power-plant construction amid the deregulation of the utility market. As the shortages threaten to spread eastward over the next few years, more Americans may face a tradeoff they would rather not make in the long-running conflict between energy and the environment: whether to build more power plants or to contend with the economic headaches and inconveniences of inadequate power supplies. (Carlton, 2000)

 

The electricity business has also run out of almost all-existing generating capacity, whether this capacity is a coal-fired plant, a nuclear plant or a dam. The electricity business has already responded to this shortage. Orders for a massive number of natural gas-fired plants have already been placed. But these new gas plants require an unbelievable amount of natural gas. This immediate need for so much incremental supply is simply not there. (Simmons, 2000)

 

We have a much larger population now. There will be much work as all will eventually be “manual labor”. We need to begin cultivating non-THC hemp for use in clothing and other materials. The plastic era is over. Crop cultivation will be done by hand, as well as making clothes etc. People in cities will need transportation to work sites, where they may stay a week or so returning home on weekends. Transportation will revert to horse and oxen. Rail transport is useable. Horses and Oxen may pull boxcars of freight. Steam Locomotives could be used, however the coal that is left must be used cautiously.

Governments were made to provide a base for the health, welfare and safety of the people. For to long government has been focusing on the monetary side of industry. Industry will take care of itself, as long as there are entrepreneurs born in this life. Perhaps a “New Government System” is necessary, without the institutions that focus on gathering money. (parties)

 

 

By SUSAN BRYCE

The Saudis have a saying “My father rode a camel, I drive a car, my son rides in a jet airplane – his son will ride a camel.”

In July this year BP Amoco, the world’s second largest oil company, announced it had chosen a flower as its new emblem in a dramatic upheaval of the oil multinational’s global brand. Unveiling the new emblem, Sir John Browne, BP chief executive, suggested that “BP” be read not as British Petroleum, but as “Beyond Petroleum”.

The new green and yellow floral sunburst design distances BP from its core business of hydrocarbons. Replacing the company’s ancient shield is the BP Helios mark, named after the Greek sun god. The new logo was designed by consultants Landor, who pocketed a US$7 million fee for their services. TV advertisements are currently screening in Europe and international media stations promoting BP as the company going “Beyond Petroleum”. In the UK, one hundred million dollars per year has been allocated over four years for BP’s television advertising campaign focusing on renewable energies.

Meanwhile Shell, another hydrocarbon giant has been ‘scenario planning’ and has announced that “gas and renewables could meet almost 50% of the fuel requirements for power generation in Organisation for Economic Cooperation and Development (OECD) countries by 2020.” In 1999 the company established Shell Hydrogen as a core business to develop opportunities related to hydrogen fuel cells and the company is pouring billions into research and development of solar, wind and biomass energies. Like BP, Shell is running a series of television advertisements telling the world about petroleum alternatives.

In a related development, the Ford motor company announced in October 2000 that the internal combustion engine would be replaced by hydrogen fuel cells ‘soon’. Ford is one of three major automobile companies that have committed to providing mass produced hydrogen fueled cars by 2004.

So what’s going on? If you listen to the propaganda, the oil and car companies are just responding to ‘consumer demand’ for environmentally friendly alternatives. But how many car owners have you heard lately demanding ‘clean and green fuel’? How many car owners do you know that are demanding cars that run on hydrogen fuel cells? Only a decade ago, inventors that said cars could run on hydrogen fuel cells were laughed out of town!

Has climate change spooked the major fossil fuel polluters into doing something positive for the environment? Do the oil companies want to capture a bigger slice of the energy market, hence their interest in renewables? Have they suddenly decided to take ‘corporate responsibility’? The answer to all of the above is a cynical ‘yes’. But there is one other overriding factor which has forced the global oil companies to look ‘beyond petroleum’.

Oil is a finite resource. The cup that the world presumed to be running over with oil has been revealed to be half full. “Beyond Petroleum” signals the beginning of the end for hydrocarbon man. We are entering the post-petroleum world.

In the closing years of the 20th century, technological advances enabled petroleum geologists to accurately estimate the reserves of oil worldwide. The entire globe has now been explored for oil and natural gas. In the mid 1990s confident forecasts regarding ultimate oil and natural gas production, the timing of production peaks and subsequent rates of decline, were made. The conclusion reached was that oil production would peak in the first decade of 2000. A ‘production peak’ occurs when approximately half of the “Estimated Ultimately Recoverable” (EUR) oil has been recovered. From then on, it’s all down hill. Demand will exceed supply.

The present phase of petroleum exploration began with introduction of 3-D digital seismic methods in the late 1970s. This technical refinement coincided with the Iran-Iraq war and the accompanying 1980 oil price surge that produced a global public energy panic. A worldwide exploration boom followed immediately to find oil anywhere outside the Persian Gulf. But despite intense efforts by all of the world’s oil companies, only a few major oil fields were unearthed. The world now uses about 26 billion barrels of oil a year, but in new field discoveries, oil companies are finding the equivalent of less than 6 billion barrels per year.

Who are the people making these dramatic claims? How did they reach their sensational conclusions? What evidence exists to back up claims that the first decade of the 21st century is the beginning of the end for hydrocarbon man? This article will attempt to provide answers to these questions.

First up, who are the people making these dramatic claims? They are a small but vocal group of international petroleum geologists who have built new mathematical models to predict peak oil production and the ensuing decline of oil. They argue that it is not when the oil runs out, that is important, but when peak production is reached. Peak production signals the half way mark, and the need to begin the transition beyond petroleum. The principal proponents of the theory are Dr. Colin CJ Campbell, author of The Golden Century of Oil and the Coming Oil Crisis, and Dr. Jean Laherrere, whose work has appeared in highly, respected oil industry journals.

Campbell and Laherrere are both petroleum geologists with more than 40 years experience. They currently work for the Geneva based “Petroconsultants”, reputedly the world’s leading independent provider of data and analysis for petroleum exploration and production. In their 1995 report “World Oil Supply 1930 – 2050”,1 Campbell and Laherrere conclude that the planet’s oil supplies will be exhausted much sooner than previously thought. In making their forecast, Campbell and Laherrere used a formula devised in the fifties by geologist M. King Hubbert and used with extreme accuracy throughout the oil industry to predict peak yield in individual fields. They applied the Hubbert formula on a global scale, producing an authoritative model showing oil production as a bell curve with the apex at the point when half of the available oil has been used up. “World Oil Supply 1930 – 2050”, made available to oil industry insiders for US$32,000, says that world oil production and supply will peak as soon as the year 2000 and would decline to half the peak level by 2025. Campbell and Laherrere forecast large and permanent increases in oil prices after the year 2000.

About 80 per cent of the oil produced today flows from fields that were found before 1973, and the great majority of them are declining. According to Campbell we have been lulled into a false sense of security and the “myth of spare capacity has set the stage for another oil shock.”2 Campbell says most data on the world oil reserves show them marching steadily upwards over the past 20 years, but in reality, much of the world’s oil reserves have been overestimated by the oil companies who are concerned only with reporting reserves, not dwindling supplies. OPEC countries have compounded the reporting problems by continually revising their oil reserves upward, so that they could pump more oil under the quota system. Additionally, Campbell claims there has been a failure to backdate revised estimates of oil reserves to the beginning of operation of individual oil fields.

In an address to the UK House of Commons in July 1999, Campbell attacked the myth of spare capacity:

Unfortunately the public database is extremely unreliable. I might here refer to BP’s Statistical Review which many people consider a valid source of information given its reputable author. It is in fact exceedingly unreliable. It simply reproduces data from a trade journal and does not reveal the company’s own considerable knowledge. It is very unfortunate that a company of this standing should put out such misleading information. I don’t know why it does so.

In “World Oil Supply 1930 – 2050”, Campbell and Laherrere backdated figures to the discovery of oil fields, revised estimates to compensate for excessive reporting of reserves and used the formula devised by Hubbert to assess the real situation of world oil. They concluded that if growth in world demand continues at a modest 2 percent per year, world oil production could begin declining in the year 2000 (outside the Persian Gulf) with world peak occurring about 2013 (inside the Persian Gulf). Even enormous and unlikely increases in Estimated Ultimately Recoverable oil would buy the world little more than another decade (from 2007 to 2018). In short, unless growth in world oil demand is sharply lower than generally projected, world oil production will probably begin its long-term decline soon – and certainly within the next two decades.

In the 1995 OPEC Bulletin, Laherrere argues that total amount of ultimately recoverable world oil is estimated at 2,330 billion barrels, but accounting for over reporting of reserves, it actually totals only 1,750 billion barrels.3 His analysis using production curves from depletion models indicates the midpoint of world oil depletion would likely be reached by about the year 2000 at about the current rate (1995) of production and then decline at a rate of about 2.7 percent per year. By 2050, Laherrere forecasts world oil production will have dropped to the levels of the 1960s.4

So who is listening to the likes of Campbell and Laherrere? Obviously the oil companies and the automobile companies. The G8 group of leading industrial nations is also listening. Fears that the world is rapidly approaching oil production peak galvanised the G8 into action in March 1998 at a meeting in Moscow, where energy ministers officially adopted the views of Campbell and Laherrere. They formed The Task Force on Renewable Energy that met for the first time this year. The Task Force has been established to identify the main barriers to the use of renewable sources of energy. Dr. Corrado Clini of the Italian Ministry for Environment and Sir Mark Moody-Stuart, Chairman of the Royal Dutch/Shell Group of Companies, have been appointed joint co-chairs of the Task Force.

The powerful International Energy Agency has also adopted the views of Campbell and Laherrere regarding the impending ‘production peak’ of oil. The IEA was established in 1974 with the aim of bringing OPEC to its knees. It was organised as an arm of the OECD and is made up of the world’s 25 richest Western nations, including Australia, Canada and the USA. In 1975, Anthony Samson, author of the highly acclaimed book, The Seven Sisters, described the IEA as an “instrument of Western collaboration, which was Kissinger’s special brain child…. Dr. Kissinger saw it [the IEA] essentially, though he did not publicly say so, as a counter-cartel to confront OPEC and break it.”5

One of the IEA’s chief planks in the post Cold War era has been to advocate liberalisation of oil markets. The IEA and its member countries (principally the US) are currently spearheading attacks on OPEC, advocating the need for “more open and transparent oil markets, which respond swiftly to market signals.”

Significantly, the IEA is organising the ‘World Climate Tech 2000’ conference to be held in November at The Hague. Over eight thousand participants are expected to attend the conference, which is billed as the largest international gathering of its kind, representing over 180 governments, United Nations bodies and related organisations, private sector associations and environmental groups. The conference will have a different theme each day, focusing on options for climate change mitigation. Wind, solar power, fuel cells and hybrids will be showcased.

Sponsor of the IEA’s World Climate Tech 2000 is the World Business Council for Sustainable Development (WBCSD), one of the UN’s “Civil Society” partners.6 The WBCSD is a grouping of the world’s top 152 companies (see below for full membership listing). The WBCS is promoting the ‘Earth Charter’, to be presented to the United Nations for ratification in 2000. The Earth Charter has been in the pipeline now since the 1992 Rio Earth Summit.7 It was drafted by the Earth Commission by Steven Rockefeller, chair of the Rockefeller Brother’s Fund and son of Nelson A. Rockefeller. Steven Rockefeller is a professor of religion and recently retired to “pursue his interests in philanthropy, ethics, and the environment.”8 Rockefeller’s ‘Earth Charter’ “will articulate a global ethic of sustainable living and environmental protection.”9

Let us now have a look at the information assembled here in this article so far. First up we have two of the world’s major petroleum companies suddenly going ‘beyond petroleum’. Then the world’s largest car manufacturer announces that the internal combustion engine will be replaced by hydrogen fuel cells ‘soon.’ Additionally we have disturbing claims that world oil production is no longer able to meet world oil demand. And we also have a gaggle of powerful transnational corporations abruptly developing an interest in global environmental sustainability, adopting charters of corporate responsibility and advocating the need for an Earth Charter so that we can all have a ‘sustainable’ future.

The big picture here appears to be what the globalists are calling “the transition”, or “The transition to Interdependence”. This transition was acknowledged in January this year by UK Prime Minister Tony Blair who commented: “Twenty years on from the oil shock of the 1970s, most economists would agree that oil is no longer the most important commodity in the world economy. Now, that commodity is information.” What we are witnessing is a transition from the old economy – based on oil – to the new economy – based on information technology.

For many readers, the discussion so far will have provoked immediate cries of ‘wolf’. We all remember the oil crisis of the 1970’s. The oil didn’t run out and it’s not going to! This is just another crisis like the Y2K emergency10 – it will never eventuate. But let us now take a look at some signposts that could indicate the end of hydrocarbon man.

1. The mad scramble for new energy sources

The world’s economy, so far, has been driven by an abundant supply of cheap oil. A coming oil crisis would cause economic and political discontinuity of historic proportions. If the world really has reached the peak of oil production, then the transnational corporations (TNCs) need to position themselves as the providers of new energy sources. Otherwise they would lose control of the global economy.11

Unconventional sources are now being considered as places to tap oil. These include coal and shale, heavy oil and tar, deepwater and polar areas. BP is pushing ahead with the development of Northstar, the first-ever offshore oil development in the Arctic. The Northstar project will use the unprecedented and untested technology of pipelines buried beneath the seabed to pump oil ashore posing a one in four risk of a major oil spill. There is no known way of cleaning up oil spills below the Arctic ice.

This appears to be a desperate grab for oil. Synthetic oil and natural gas liquids are also being explored as alternatives. Testing the viability of using methane hydrates (in ice crystals below the ocean floor) as an energy source is currently the largest international earth sciences project in the world. Five years ago, there was practically no interest from the oil companies in renewables such as solar, wind and hydropower. Now these are major new areas of investment. Shell has just allocated $6 billion to convert natural gas to clean fuel.12

2. Transport

The modern world – the global economy – could not exist without the low cost movement of people and commodities. Oil powered transport dominates the economic infrastructure that links and sustains the ‘new economy.’ Bill Ford’s announcement that Ford motor company would work to replace the internal combustion engine with hydrogen fuel cells ‘soon’ follows the unveiling in March 2000 of three new fuel-efficient cars, made by leading automakers Ford, General Motors and DaimlerChrysler. The concept cars are the result of a drive launched by the US government called “Partnership for a New Generation of Vehicles”, which was aimed at producing – by 2004 – a family car capable of travelling 80 miles per gallon of gasoline, representing up to three times the fuel efficiency of conventional cars. The Partnership’s timetable called for each automaker to roll out “proof-of-technical-concept” vehicles by 2000, followed by production prototypes by 2004.13

3. The agro-chemical companies

Modern agriculture is the use of land to convert petroleum into food. World agriculture is now highly dependent on oil and natural gas for fertilisers and pesticides. As a base for the production of these materials, oil and natural gas are irreplaceable.14 Billions of people now depend on food production that requires substantial inputs of petroleum fuels to power farm machinery, for fertilisers, herbicides and transport. Without these inputs, agricultural productivity would markedly decline. The effect of the depletion of world oil and its close associate, natural gas, on overall world food production cannot be ignored. Vast hectares are powered, planted and harvested by machines that run on fossil fuels. Crops are hauled to central processing points, and then to market by huge trucks. Food is distributed to remote areas and cities by vehicles run on oil. If the fertilisers, partial irrigation (in part provided by oil energy) and pesticides were withdrawn, corn yields, for example, would drop from 130 bushels per acre to about 30 bushels.15 The additional hundred bushels has been produced on ‘ghost acres’, which do not exist except in the form of fertilisers, made with natural gas and oil for pesticides. When these ghost acres no longer exist, agricultural productivity will be dramatically reduced.

If we consider that we are entering the post petroleum world, it makes sense for the agro-chemical giants to get out of chemicals and into the life sciences – genetic engineering. Now we begin to understand the concern with ‘food security’.16 This is why the world’s top transnational food corporations have suddenly become concerned with ‘sustainability.’17

4. E-commerce and the New Economy

The fundamental driver of the 20th century’s economic prosperity was an abundant supply of cheap oil. If world oil demand increases significantly from the current 68 million barrels per day to near 94 million barrels per day in 2010 (as projected by the IEA), OPEC would be expected to increase production from the present 27 million barrels per day to as much as 48 million barrels per day. Then, in 2010, OPEC would be providing over half of the world’s oil and could largely control world oil prices. OPEC has no current plans to increase oil production beyond current levels after 2000. To do so would require enormous capital investment in infrastructure and would substantially increase the price of oil. For the industrial countries, the oil price spike of the early 1970s brought profound dislocations and a deep recession. The economic impact in Europe was correspondingly severe.

A fundamental question which the globalists must address is how to keep the economy going in a world that has gone ‘beyond petroleum’. This question was answered by Tony Blair. Information technology – the new economy – provides the answer.

In the post petroleum world, we will shop from home via the Internet. Once digital TV becomes widespread (by 2008), we can order everything we need online. Even if we are to cope with fuel shortages, limited transport and disruptions to supply, we can still order our consumer goods and vital supplies via the web. What a quick and efficient system, and its all so much more environmentally friendly! Everything will be delivered to the doorstep by a fleet of TNC owned delivery vehicles run on compressed natural gas18 (well, it’s good to know they’re doing their bit to save the environment!).

5. Sustainability

The Asian ‘recovery’ and the current burst of economic growth in China, South America and Eastern Europe is fuelled by oil. Demand is taxing the present system beyond production capacity. In February 2000, the International Energy Agency announced “industry oil stocks worldwide were lower at the end of last year (1999) than at any time in the past decade. Yet demand is constantly growing. The present gap between demand and supply means that no surplus oil is available to build stocks and that they continue to be drawn down to meet current requirements. To restore stocks by the end of 2000, even to the very low levels of 1999, an early and substantial increase in production will be needed… the IEA will reinforce its work on energy efficiency and energy diversification.”

On 4 October 2000, the IEA governing board met to “assess the world oil situation”. In a veiled warning of things to come, the IEA reaffirmed its intention to give “new impetus to longer-term policies to reduce oil demand, improve energy efficiency, diversify supplies and accelerate the deployment of new energy technologies.” The Agency “confirmed the availability of security stocks in IEA countries and their readiness for use in the event of significant supply disruption.”19

On 10 October 2000, the IEA released its “Highlights of the Current World Oil Market Report.” The report says:

Simply put, the system is stretched and lacks flexibility. Marine freight rates have surged on increased demand for charters. Refinery utilisation in key markets is running close to capacity, with discretionary maintenance deferred. Major crude oil and product pipelines are full. The system is strained and running hard just to keep even. Extremely low stocks exacerbate this situation and there is precious little room for contingencies. And yet, the question on everyone’s mind is what will the winter bring? Will we have mild or unseasonably cold winter in North America, Europe and Asia? Will heating oil stocks be sufficient to meet peak regional demand? Will Russian supplies be available and adequate to replenish depleted stocks? North American natural gas prices are climbing on concerns about deliverability. In a tight market, in the midst of a cold spell, will deliverability factors force fuel switching to crude oil? Can the fuel and heating oil market absorb increased demand? Will refineries be able to operate at maximum capacity? What happens if there is a major refinery outage or a pressure-down of a key crude or product pipeline?

The IEA leaves these questions unanswered, but clearly there seems to be panic at the top.

If we really are entering the post-petroleum world, all of the rhetoric about ‘sustainability’ begins to make sense. We’ve all heard it: Sustainable agriculture. Sustainable water. Sustainable development. Sustainable energy. Sustainable transport. Sustainable. Sustainable. Sustainable. But what does ‘sustainable’ actually mean? It means subsistence. It means the bearable minimum. Sufferable, tolerable and passable. Sustainable means to survive, not thrive. Sustainability will become the imperative of the post petroleum world.

The United Nations Agenda 21, adopted at the UN Conference on Environment and Development (Earth Summit in Rio de Janeiro) maps out their path for our ‘sustainable’ future. Since the Earth Summit, sustainable development and use of energy have been highlighted and addressed in all major international forums.
Discussing energy use, Agenda 21 says:

Economic growth and social development depend on energy use and to meet the needs of a growing world population global energy consumption continues to increase substantially. The challenge, therefore, is how to meet the growing demand for energy while mitigating the impact of energy supply. Much of the world’s energy is produced and used in ways that may not be sustained if overall quantities continue to increase substantially and if technology were to remain constant. With this heightened awareness underpinning the fact that choices must be proposed and made for energy futures compatible with sustainable development and thus a sustainable world.

On the transport front, Agenda 21 says:

Transportation is expected to be the major driving force behind a growing world demand for energy. It is the largest end-user of energy in developed countries and the fastest growing one in most developing countries. Current patterns of transportation are not sustainable and may compound both environmental and health problems. There is, therefore, a need for action, ranging, inter alia, from the promotion of integrated transport policies and plans, the accelerated phase-out of leaded gasoline, the promotion of voluntary guidelines and the development of partnerships at the national level for strengthening transport infrastructure and developing innovative mass transport schemes.

In June 2000, the UN Economic and Social Council20 reported on measures that must be implemented to achieve a “sustainable energy future.” The following points are under consideration:

– Integrated resource planning and demand side management to assist electric utility companies;
– Renewable energy development;
– Energy recovery from solid waste including landfill gas;
– A global initiative on transport energy with the World Bank, addressing transport energy planning, traffic management, road pricing,21 alternative fueled vehicles, emissions testing and mass transit. (continued below)

Considering the evidence presented in this article so far, it is possible to make the following conclusion:

We are confronted with the greatest transformation of human affairs in all history. The world will soon pump oil at maximum capacity. Once this happens, even minor disruptions will send immense shocks reverberating through the oil market, resulting in sharp and sustained increases in the prices of crude and refined products. This will cause economic growth to slow. Recession, even depression is possible. These looming problems became critically apparent in 1995,22 and have now been exacerbated by escalating tensions in the Middle East.

The peak of world oil production was reached in 2000, the roll over of the global energy clock (the real Y2K emergency). The corporations are now starting to unveil environmentally friendly technologies that they patented and locked away years ago. The TNCs must take control of alternative and renewable energy sources so that the masses continue to be dependent upon them. This way, continued profits and stability of the world economy is ensured.

The TNCs have banded together to usher in a new era of ‘corporate social responsibility’. This new ‘ethic’ will see TNCs becoming concerned with human rights, the environment, labour standards, women and minorities. Corporate social responsibility means just that. The corporations will take responsibility for our social development. They will maintain that their good deeds are propelled by global environmentally sustainable ethics.23 This makes their charge for clean and green technologies more credible and believable.24

The TNCs have begun a swift and bold program to implement sustainable agriculture systems, to ensure that agriculture is more productive as demand rises and the use of fossil fuels declines. Genetic engineering not only enables the TNCs to respond to the increasing demand for food, but also enables them to increase their control of the world’s food resources through mergers and vertical integration of markets. By setting global ‘standards’ for sustainable agriculture, they will be able to dictate what food is grown, where it is grown, how it is grown and any other ‘treatments’ that are deemed necessary.25

The UN is widely perceived to be the only global body with enough ‘clout’ to solve the collective problems of humanity and the only organisation which can solve problems that cross borders and transcend national boundaries. Following the announcement of the Global Compact in 1999, the UN and the transnational corporations (the members of the WBCSD) have been busy working on an Earth Charter which will be introduced so that their control will be all pervading. The alliance between the TNCs and the UN is a tactic that will ultimately consolidate control of the global agenda.

The risk of chaos, disorder and destruction faces the TNCs if they fail to adapt appropriately in time. But the people of the world see the dramatic consequences of global climate change before them. They see the need to change their ways and they are willing to make ‘The Transition’ beyond petroleum.

The destroyers of our planet have usurped us. In the first decade of the new century, we may have had an opportunity to throw off the shackles of corporate control. A post petroleum world would offer many opportunities for independence, not the globalist vision of interdependence being foisted upon us. A post petroleum world would provide scope for food self-sufficiency, not food security, which the corporate capitalist system offers. A post petroleum world would provide the opportunity for people to look for real and lasting alternatives to the capitalist system.

In the closing paragraph of The Seven Sisters, Anthony Samson makes a dire prediction about the future of the oil economy:

The road toward any equitable control system will be a long and thorny one, and no solution can be acceptable to every nation. Any agreement over oil implies a first step towards some form of world government. But for this reason, the reward will be far greater than the security of oil supplies; it will be the beginning of a new kind of global responsibility between nations. Oil, which has been such a combustible element in world conflicts in the past, may yet prove a lubricant for world peace.

From the evidence presented in this article, it would appear that Sampson’s prediction is coming true. ‘The Transition’ to the post petroleum world is occurring and it will be used to usher in a new era of global governance and corporate control.

Footnotes:

1. The report was published by Petroconsultants.

2. Campbell, C.J., “Myth of spare capacity setting the stage for another oil shock”, Oil & Gas Journal, 20 March, 2000.

3. Laherrere, Jean. World Oil Reserves – Which Number to Believe?, OPEC Bulletin, February 1995, p. 9-13.

4. Ibid.

5. Sampson, A., The Seven Sisters, Coronet Books, Hodder & Stoughton, Great Britain, 1975.

6. The other “Civil Society” partner is the International Chamber of Commerce. At the time of writing, these are the only two “Civil Society” partners officially acknowledged by the UN.

7. The Earth Charter has been developed by the Earth Council, a grouping of self appointed ‘earth commissioners’ including Mikhail Gorbachev, former president of the Soviet Union, and Chair of Green Cross International; and Maurice Strong, who is head of the reform agenda at the United Nations and Chair of the Commission on Global Governance.

8. Rockefeller Brother’s Fund Annual Report, 1997

9. Ibid

10. If another energy crisis develops, wait to see all those Y2K contingency plans dusted off. Maybe Y2K was the roll over of the global energy clock.

11. Imagine all those people out there buying up solar power systems and then being independent of the electricity companies, or equally, the world's car owners buying hydrogen fuel cell cars and never paying another cent for their petrol. Now we understand why there is a drive to commodify water – to make water available on a user pay basis. If water is to be one of the fuels for cars of the future, then we will have to pay for it. Keep an eye out for Shell’s latest television advertisement about how the company is helping an inventor develop a prototype car that runs on water.

12. If you’re wondering about all that Caspian oil we hear about, consider that the bid for Caspian oil is production – rather than exploration – oriented.

13. For further details on the implications for trade and transport, see Fleay, B.J., “Beyond Oil: Transport and fuel for the future,” National Symposium of the Chartered Institute of Transport in Australia, Launceston, Tasmania, 6-7 November 1998.

14. Oil and natural gas also play an important role in the production of products ranging from paints and plastics to medicines and inks.

15. Youngquist, W., Population and Environment, A Journal of Interdisciplinary Studies, “The Post Petroleum paradigm and population”, Volume 20, No 4, March 1999.

16. Food security, (not food self sufficiency) is the principal concern of the UN’s Food and Agriculture Organisation (FAO). Food security is all about making us more dependent upon mass production. Food self sufficiency on the other hand would mean more independence for individuals.

17. An excellent example is Unilever’s ‘Sustainable Agriculture Initiative.’ Unilever ranks third among the world’s food titans, and is a member of the World Business Council for Sustainable Development. According to Unilever, sustainable agriculture must be “productive, competitive and efficient while at the same time protecting and improving the natural environment and conditions for local communities.” One of Unilever’s chief advisers is Björn Stigson, President of the World Business Council for Sustainable Development and former executive vice president of the life sciences company Asea Brown Boveri. Unilever is also discussing the need for ‘sustainable agriculture standards’. This means rules for global agriculture.

18. The Brisbane City Council announced in October 2000 that it would convert 120 vehicles from its bus fleet to run on compressed natural gas.

19. IEA member countries are required to have 90 days supply of oil in reserve.

20. United Nations Economic and Social Council, Committee on Energy and Natural Resources for Development, “Follow up to the first session of the Committee on Energy and Natural Resources for Development: energy sector”, Report of the Secretary General.

21. Road pricing means road tolls.

22. The same year that the Millennium bug was discovered.

23. The World Bank describes these ethics as “the New Environmentalism”. See the World Bank publication “Ten Principles of the New Environmentalism”, World Bank Finance & Development, December 1996.

24. The WTO push for privatisation and outsourcing of government contracts should make sense now. The future of government will merely be as a surveillance and monitoring organisation – big brother, a paramilitary agency.

25. ‘Treatments’ could include a range of measures including food irradiation and food additives. With the development of ‘functional foods’ and ‘nutraceuticals’, the lines between food and medicine are blurring. Drug companies will merge with food and biotechnology companies.

 

__________________________________________________________
Susan Bryce is an Australian journalist and publisher of the Australian Freedom & Survival Guide. Her interests include global politics, the new economy and the technologies of political control. She produces the Australian Freedom & Survival Guide, a newsletter that airs the dirty laundry on the international surveillance regime, Transnational Corporations, Genetic Engineering, the New World Order, Defence & Military, WTO, IMF, World Bank, Globalisation. 6 issues per year $45.00. Sample issue $7.50. Send cheque or money order payable to S. Bryce, PO Box 66, Kenilworth, Qld 4574, Australia. Email: sbryce@squirrel.com.au

The above article appeared in
New Dawn No. 63 (November-December 2000)

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Running on empty

When Canada’s natural gas reserves hit the crisis point, who will be left out in the cold?

By Andrew Nikiforuk | July 10/24, 2000

When you start cursing the size of your natural gas bill this winter, you should think first of Rob Woronuk. He’s a sharp, 59-year-old Calgary mathematician and independent gas analyst, and he’ll tell you that all the numbers on natural gas reserves pointed toward troubling shortages and higher prices more than half a dozen years ago. No alarm bells rang out then because, well, no one really is responsible for keeping an eye on natural gas reserves in Canada. "Consumers thought prices were nice and low," he says, "but nobody told them that they were living on borrowed time."

If you live in Central Canada and narrowly avoid natural gas rationing during a brutal cold snap this winter, you should thank Jim Gray. He’s the chairman of Canadian Hunter Exploration Ltd., one of Calgary’s Blue-Eyed Sheiks, and a whistle blower on the looming natural gas crunch. In a recent speech, he boldly proclaimed that North America is just about to hit the wall on supply and demand for natural gas; he decided to come forward because he thinks consumers ought to know the truth. "The worst thing is for people to be surprised," says Gray, whose speech put it this way: "Houston, we have a problem."

And if you’re wondering how a country so dependent on energy for heating and transportation could abruptly find itself in the midst of a natural gas shortage (and the pessimists say it could last a couple of years), then remember Mike Sawyer’s name. As the executive director of the Citizen’s Oil and Gas Council, this low-paid activist has repeatedly scolded Ottawa’s National Energy Board (NEB) over the last decade for market-based policies that have short-changed the public interest. "The US treats energy as strategic commodity," says Sawyer, a Calgary-based researcher. "But here in Canada we piss away our resources and have no intelligent government policy on energy. The NEB didn’t even predict this shortfall."

That’s just a taste of what one pipeline analyst ruefully calls "the mess"–and what you’ll be reading about this fall in gigajoules. Not only is Canada’s looming natural gas crisis a sorry affair; it’s a fully predictable one with widespread implications. Tight gas supplies not only mean higher heating bills; they also mean pricier electricity, inflationary pressure and fuming voters. Some industrial sectors such as pulp and paper are already switching back to fuel oil due to climbing gas prices. "There is no way out of this in the short term," notes Tom Christie, an investment adviser with BMO Nesbitt Burns. "If it’s a cold winter, some people in the oil and gas industry are even afraid Ottawa might re-regulate natural gas."

The growing strategic importance of natural gas hasn’t escaped the attention of the multinationals. Three of Canada’s biggest producers–Shell Canada Ltd., Petro-Canada and BP Amoco PLC–started dumping their oil assets in 1999 to concentrate on oil sands production and gas holdings. Many of these same players are now participating in a full-scale gas rush into the Northwest Territories and the Mackenzie Delta, where five different pipeline proposals are jockeying for favor.

But rising gas prices in a deregulated market with declining reserves will make the most headlines. Three years ago, the spot price for gas sat at $1.12 per thousand cubic feet. Now it’s skyrocketed to $5.80. For the first time in Gray’s long and successful career, he predicts "prices will be higher this summer than they were last winter." In addition, summer storage levels are at all-time lows in some areas. "This mess raises significant public policy questions," says one pipeline analyst. "And the key one is this: Is there a will to make public policy on natural gas in this country?"

The crisis, of course, has been building for years and owes much to North America’s booming economy and the popularity of natural gas for electrical generation. Unlike coal-fired plants and nuclear power stations, a gas-fired generator doesn’t take much time and capital to light up a region. Nor does it pollute the air or saddle future generations with horrendous environmental burdens. As a result, the Canadian Energy Research Institute estimates that gas demand for electricity generation could almost triple over the next decade.

Similar developments in the US, plus declining domestic supplies, have steadily ratcheted up demand for Canadian gas. Since 1986, US imports of Canadian gas have increased fivefold. In fact, Canada now exports more than half of all its gas production (that’s more than $11 billion worth) south of the border. Within the next five years, the US Energy Information Administration predicts that Canada’s share of the US gas market will climb to 18.4% from 14%. "A third of all of the world’s gas consumption takes place in North America," notes Gray. "We are dealing with a giant and when it starts to falter a little bit then you are dealing with something that has enormous consequences and can’t be turned around with a single strategy."

And that’s where the problem comes in, because many experts don’t believe Canadians can find enough gas to satisfy US demands, let alone fill existing pipelines. Take the multibillion-dollar Alliance megaproject that will ship gas from northern BC to Chicago markets this December. "It will provide surplus capacity to move gas to the US we don’t have," notes Woronuk. "It’s unfortunate." As a result, Alliance may have to hijack gas from TransCanada PipeLine’s lines to fulfill its commitments.

It’s not that the Western Canada Sedimentary Basin has died or gone dry. It’s just that half of its reserves, the shallowest and easiest to exploit, have already been drained to warm North American homes. And the remaining reserves, including some in national parks or under Calgary’s suburbs, are either off limits, terribly sour or very difficult to tap in economical quantities. Despite a record drilling of 6,300 gas wells in 1999, overall gas production isn’t going anywhere in Alberta. "The myth is that we have lots of gas and lots of activity to get it, but we don’t have lots," says Woronuk. "The limits of the basin are being realized."

These limits can be read in any number of ways. Industry, for example, is at the moment replacing only about 70% of what we are consuming back into the system. Since the 1960s, the average size of gas pools has noticeably shrunk from 25 billion cubic feet to 1.6 billion cubic feet. Many wells today yield little more than half a billion cubic feet. "The size of a decent well just keeps going down," notes Christie. "I listen to lots of guys in the industry bragging about new wells, but they are just dog and pony shows. Until we go to the frontier, no really significant reserves will be discovered."

But therein lies another problem. Canada’s frontier gas reserves just can’t be developed quickly. It takes big bucks and long lead times to pump gas out of the eastern seaboard or northern barrens. In fact, Gray suspects that it may take as long as seven to 10 years and as much as $10 billion to put northern gas in southbound pipelines. "You just can’t add water and shake," adds Gray. "We have become dangerously complacent regarding our natural gas supplies on this continent."

The shortage has also been compounded by natural gas deregulation in the late 1980s–and the NEB’s wonky New Age philosophy on gas supplies. In the Old Economy, companies found the gas first, kept accurate tabs on reserves and then identified markets based on shrewd cost projections. But since deregulation, the NEB has operated on the belief that if you build a pipeline, gas will suddenly fill it. "It’s self-serving in times of ample supply, but as reserves decline we are screwed," notes Sawyer. "By next winter, gas prices could be 300 to 400 times higher. Is that regulation in the public interest?"

And gas prices are indeed going up across the board. According to Union Gas Ltd., one of Ontario’s major utilities, the average residential customer has already seen a 12% increase this year. Enbridge Consumers Gas just tacked on $10.50 to its customers’ monthly bills and Atco Gas added $4 more per month. Unlike easterners, who get their gas from a mix of short- and long-term contracts from a variety of sources, Albertans are already feeling the the crunch every time the spot price rises.

Nor do top analysts, such as Martin Molyneaux at Calgary’s FirstEnergy Capital Corp., see any relief in sight. "We believe we are seeing a long-term shift in how North America looks at natural gas," says Molyneaux. "There have been a whole series of miscues, and we have overestimated supply and underestimated demand. All at a time when we have $30-plus oil prices." He adds: "Politicians in North America just don’t have a clear energy policy."

The NEB has truly been asleep at the wheel. According to a high-minded study published last year, the regulator predicted that there would be no declines in gas production until 2010–and that prices would remain 50% below current levels. "They missed this current shortfall entirely," notes Woronuk. The NEB’s faulty economic model, he explains, overestimated what was in the ground and based its projections on sources of gas that are not yet available.

In fact, Woronuk is the only Cassandra who has consistently predicted a supply-demand crisis. In addition to running his own company, Gas Energy Strategies Inc., he is also a member of the Canadian Gas Potential Committee (CGPC), a volunteer group of 35 geologists and industry types that recognized as early as 1991 that no federal agency was minding the natural gas pool. "The NEB has done nothing in terms of potential reserves," notes Woronuk. "Yet it’s important for Canada to have an accurate assessment of what we have. You and I own the resource, yet Canada can’t even be bothered to husband it."

Canadian Business couldn’t reach NEB chairman Kenneth Vollman to ask questions on husbandry and price. Instead, the board had its chief economist, Glenn Booth, give us a call. For starters, he said the NEB doesn’t comment on other people’s forecasts–and is not in the business of projecting short-term prices. "Our responsibility is to make sure there is gas for Canadians in the future, and our view is that there will be," he says. How much it might cost is another issue. "We are concerned that prices have gone up so quickly so fast, and we are closely monitoring it," adds Booth, who says that some market indicators suggest high prices won’t last for long.

That’s the view being taken south of the border. John Cochener, an energy analyst at the Gas Technology Institute in Arlington, Va., agrees that the market is tight but points out that the US has reserves it can tap into quickly in its Rocky Mountain region or the Gulf of Mexico. He argues that the current shortfall is just the lag effect of low energy prices and a North American drilling slump in 1998. "Will we see shortages and factories being shut down? I don’t think it will be that bad unless we have the worst winter and the hottest summer of the past century."

The CGPC now reckons that "initiatives to address the forthcoming supply issues should probably have commenced yesterday." There is some optimism that higher prices will spur technological innovations and prudent mining of old reserves. Developing methods to tap into unconventional gas resources, such as coal-bed methane, might also be wise. Woronuk would also like to see more exploration in the Alberta foothills–already an expensive (try $30 million a well) and politically sensitive proposition. Tensions there between landowners and gas explorers have reached troubling heights due to the uncontrolled density of activity and inadequate regulation of sour gas emissions.

Some would like to see consumption decrease with perhaps a federal program to subsidize more efficient water heaters. Yet others argue a reasonable response to the gas crunch might also include the formulation of a national energy strategy–complete with an intelligence unit–so that key decisions and knowledge aren’t always left in the hands of the marketplace and multinationals. "Managing a crisis doesn’t always result in good decisions," notes Sawyer.

Of course, each and every public policy crisis also comes with investment opportunities. Companies with solid gas reserves, such as Canadian Hunter (TSE: HTR); Canadian Natural Resources Ltd. (TSE: CNQ), headed by proven manager Murray Edwards; Alberta Energy Co. (TSE: AEC); and Paramount Resources Ltd. (TSE: POU), which has strong holdings in the Northwest Territories, are obvious choices. Even though shares in these companies have almost doubled in value in the last six months (Canadian Hunter, for example, has climbed from an average of $19 last year to $33 on June 22), most analysts still consider them good buys. "Their share prices still don’t reflect higher gas prices," notes Christie. He advises investors, however, to stay away from small gas companies for the simple reason that they don’t have the capital to find big reserves. Broad-minded investors might also consider energy utilities, firms focusing on alternative sources such as solar and companies that do energy audits. "We are potentially entering an energy crisis going into this winter at the same time as a US presidential election," says Molyneaux. "It’s going to be interesting."

At the end of the day when the furnace comes on, however, investors and consumers can count on few natural gas truths. The fuel of the future is going to cost more because demand is racing hard against supply. The Western Canada Sedimentary Basin has been a good resource but it’s aged and has few easy pickings left. Last but not least the government, as usual, has been a bad shepherd and doesn’t have an accurate picture of what’s going on–or why. Yes, you should have bought natural gas stocks yesterday.

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