Will The End of Oil Mean The End of America? (Wishful thinking alert!)

Oil Fields' Free Refill - More oil than we thought (maybe)

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Will The End of Oil Mean The End of America?
Robert Freeman
Monday, March 1, 2004
CommonDreams.org

In Zen and the Art of Motorcycle Maintenance, Robert Pirsig tells the story of a South American Indian tribe that has devised an ingenious monkey trap. The Indians cut off the small end of a coconut and stuff it with sweetmeats and rice. They tether the other end to a stake and place it in a clearing.

Soon, a monkey smells the treats inside and comes to see what it is. It can just barely get its hand into the coconut but, stuffed with booty, it cannot pull the hand back out. The Indians easily walk up to the monkey and capture it. Even as the Indians approach, the monkey screams in horror, not only in fear of its captors, but equally as much, one imagines, in recognition of the tragedy of its own lethal but still unalterable greed.

Pirsig uses the story to illustrate the problem of value rigidity. The monkey cannot properly evaluate the relative worth of a handful of food compared to its life. It chooses wrongly, catastrophically so, dooming itself by its own short-term fixation on a relatively paltry pleasure.

America has its own hand in a coconut, one that may doom it just as surely as the monkey. That coconut is its dependence on cheap oil in a world where oil will soon come to an end. The choice we face (whether to let the food go or hold onto it) is whether to wean ourselves off of oil—to quickly evolve a new economy and a new basis for civilization—or to continue to secure stable supplies from the rest of the world by force.

As with Pirsig’s monkey, the alternative consequences of each choice could not be more dramatic. Weaning ourselves off of cheap oil, while not easy, will help ensure the vitality of the American economy and the survival of its political system. Choosing the route of force will almost certainly destroy the economy and doom America’s short experiment in democracy.

To date, we have chosen the second alternative: to secure oil by force. The evidence of its consequences are all around us. They include the titanic US budget and trade deficits funding a gargantuan, globally-deployed military and the Patriot Act and its starkly anti-democratic rescissions of civil liberties. There is little time left to change this choice before its consequences become irreversible.

The world is quickly running out of oil. In the year 2000, global production stood at 76 Million Barrels per Day (MBD). By 2020, demand is forecast to reach 112 MBD, an increase of 47%. But additions to proven reserves have virtually stopped and it is clear that pumping at present rates is unsustainable. Estimates of the date of “peak global production” vary with some experts saying it already may have occurred as early as the year 2000. New Scientist magazine recently placed the year of peak production in 2004. Virtually all experts believe it will almost certainly occur before the end of this decade.

And the rate of depletion is accelerating. Imagine a production curve that rises slowly over 145 years—the time since oil was discovered in Pennsylvania in 1859. Over this time, the entire world shifted to oil as the foundation of industrial civilization. It invested over one hundreds trillion dollars in a physical infrastructure and an economic system run entirely on oil. But oil production is now at its peak and the right hand side of the curve is a virtual drop off. Known reserves are being drawn down at 4 times the rate of new discoveries.

The reason for the drop off is that not only have all the “big” discoveries already been made, the rate of consumption is increasing dramatically. Annual world energy use is up five times since 1945. Increases are now driven by massive developing countries—China, India, Brazil—growing and emulating first or at least second world consumption standards. Fixed supply. Stalled discoveries. Sharply increased consumption. This is the formula for global oil depletion within the next few decades.

The situation is especially critical in the US. With barely 4% of the world’s population, the US consumes 26% of the world’s energy. But the US produced only 9 MBD in 2000 while consuming 19 MBD. It made up the difference by importing 10 MBD, or 53% of its needs. By 2020, the US Department of Energy forecasts domestic demand will grow to 25 MBD but production will be down to 7 MBD. The daily shortfall of 18 MBD or 72% of needs, will all need to be imported.

Perhaps it goes without saying but it deserves repeating anyway: oil is the sine qua non of “industrial” civilization—the one thing without which such civilization cannot exist. All of the world’s 600 million automobiles depend on oil. So do virtually all other commodities and critical processes: airlines, chemicals, plastics, medicines, agriculture, heating, etc. Almost all of the increase in world food productivity over the past 50 years is attributable to increases in the use of oil-derived additives: pesticides; herbicides; fungicides; fertilizers; and machinery.

When oil is gone, civilization will be stupendously different. The onset of rapid depletion will trigger convulsions on a global scale, including, likely, global pandemics and die-offs of significant portions of the world’s human population. The “have” countries will face the necessity kicking the “have-nots” out of the global lifeboat in order to assure their own survival. Even before such conditions are reached, inelastic supply interacting with inelastic demand will drive the price of oil and oil-derived commodities through the stratosphere, effecting by market forces alone massive shifts in the current distribution of global wealth.

If the US economy is not to grind to a halt under these circumstances it must choose one of three alternate strategies: dramatically lower its living standards (something it is not willing to do); substantially increase the energy efficiency of its economy; or make up the shortfall by securing supplies from other countries. President Bush’s National Energy Policy published in March 2001 explicitly commits the US to the third choice: Grab the Oil. It is this choice that is now driving US military and national security policy. And, in fact, the past 60 years of US policy in the Middle East can only be understood as the effort to control access to the world’s largest supply of oil.

Witness, for example, the deep US embrace of Saudi Arabia since World War II. One quarter of all US weapons sales between 1950 and 2000 went to Saudi Arabia despite its horrifically repressive, literally medieval tribal nature. The CIA’s overthrow of Mohamed Mosadegh in Iran in 1953 after he nationalized his country’s oil is another example. So, too, was the US strategic embrace of Israel during the 1967 Six Day War. The US was deeply mired in Vietnam but needed a “cop on the beat” to challenge Arab states—Egypt, Iraq, Syria, Yemen—that were “going Soviet.” It has stuck with that relationship ever since.

More recent examples of national strategy in bondage to the compulsion for oil include US support for Saddam Hussein in the Iran/Iraq War; its support for Osama bin Laden in the Afghanistan War against the Soviet Union; and, of course, the most recent invasion of Iraq to seize its oilfields and forward position US forces for an invasion of neighboring Saudi Arabia when it is inevitably destroyed by internal civil war. And under a Grab the Oil strategy, militarization of US society will only deepen.

The reason is that a very major portion of the world’s oil is, by accident of geology, in the hands of states hostile to the US. Fully 60% percent of the world’s proven reserves of oil are in the Persian Gulf. They lie beneath Muslim countries undergoing a religious revolution that wants to return the industrial world to a pre-modern order governed by a fundamentalist Islamic theocracy. Saudi Arabia alone controls 25% of all the world’s oil, more than that of North America, South America, Europe and Africa combined. Kuwait, Iran and Iraq, each control approximately 10% of the world’s oil.

Another 15% of the world’s oil lies in the Caspian Sea region, also a dominantly Muslim region. It includes a group of post-Soviet, satellite and buffer states that lack any semblance of legal or market systems. They are extraordinarily corrupt, really just Gangster Thugocracies masquerading as countries. Think Afghanistan. Both Russia and China consider this region part of their “sphere of strategic influence” portending significant clashes for the US over coming decades.

As long as the US chooses the Grab the Oil alternative, the implications for national policy are inescapable. The combination of all these facts—fixed supply, rapid depletion, lack of alternatives, severity of consequences, and hostility of current stockholding countries—drive the US to HAVE to adopt an aggressive (pre-emptive) military posture and to carry out a nakedly colonial expropriation of resources from weaker countries around the world.

This is why the US operates some 700 military bases around the world and spends over half a trillion dollars per year on military affairs, more than all the rest of the world—its “allies” included—combined. This is why the Defense Department’s latest Quadrennial Review stated, “The US must retain the capability to send well-armed and logistically supported forces to critical points around the globe, even in the face of enemy opposition.” This is why Pentagon brass say internally that current force levels are inadequate to the strategic challenges they face and that they will have to re-instate the draft after the 2004 elections.

But the provocation occasioned by grabbing the oil, especially from nations ideologically hostile to the US, means that military attacks on the US and the recourse to military responses will only intensify until the US is embroiled in unending global conflict. This is the perverse genius of the Grab the Oil strategy: it comes with its own built-in escalation, its own justification for ever more militarization—without limit. It will blithely consume the entire US economy, the entire society, without being sated. It is, in homage to Orwell, Perpetual War for Perpetual Grease.

In his first released tape after 9/11, Osama bin Laden stated that he carried out the attacks for three reasons: 1) to drive US military forces from Saudi Arabia, the most sacred place of Islam; 2) to avenge the deaths of over half a million Iraqi children killed, according to UNICEF, as a result of the US-sponsored embargo of the 1990s; and, 3) to punish US sponsorship of Israeli oppression against the Palestinian people. Oil and the need to control it are critically implicated in all three reasons.

But now comes the sobering part. In response to the 9/11 attacks, Secretary of Defense Donald Rumsfeld stated that the US was engaged in “…a thirty to forty year war (!) against fundamentalist Islam.” It is the fever of War, of course, that becomes the all-purpose justification for the rollback of civil liberties. Lincoln used the Civil War to justify the suspension of habeas corpus. Roosevelt used the cover of World War II to inter hundreds of thousands of Japanese Americans. And now Bush is using the self-ratcheting “War on Terror” to effect even more sweeping, perhaps permanent rescissions of civil liberties.

Under the Patriot Act, a person can be arrested without probable cause, held indefinitely without being charged, tried without a lawyer or a jury, sentenced without the opportunity to appeal, and put to death—all without notification of…anybody. This is simply a Soviet Gulag and it has been rationalized by the hysterical over-hyping of the War on Terror. The fact that it is not yet widespread does not diminish the more important fact that it has been put in place precisely in anticipation of such procedures needing to be being carried out on a mass scale in the future.

The broader implications of the Patriot Acts go far beyond the abusive treatment of criminals or terrorists. Their portent can be glimpsed in the language used to justify them. When Attorney General John Ashcroft testified on behalf of the Act, he stated, “…those who oppose us are providing aid and comfort to the enemy.” These are carefully chosen words. “Aid and comfort to the enemy” are the words used in the Constitution to define Treason, the most fateful of crimes against the state. In other words, protest against the government—the singular right without which America would not even exist—is now being defined as trying to overthrow the government.

And by the internal logic of a global Oil Empire, this is entirely reasonable. The needs of the people of any one country must be subordinated to the larger agenda of Empire itself. This is what the Romans learned in 27 B.C. when Augustus proclaimed himself Emperor. It was the end of the Roman Republic and the disappearance of representative government on earth for almost 1,700 years, until the English Civil Wars in the 1600s. That is the reality we are confronting today—offering up our democracy in propitiation to an Empire for Oil. It will be a fateful, irreversible decision.

Returning to Pirsig’s metaphor, the choice of a Grab the Oil strategy is the equivalent of the monkey holding onto the handful of food, remaining trapped by the coconut. It is an ironclad guarantee of escalating global conflict, isolation of the US in the world, unremitting attacks on the US by those whose oil is being expropriated and whose societies are being dominated, the militarization of the US economy, the irreversible rescission of civil liberties, and the eventual extinguishment of American democracy itself. It is the conscious, self-inflicted consignment to political and economic death.

But the coconut metaphor, remember, involves a choice—food or freedom. What, then, is the alternative, the letting go of the paltry handful of food in conscious preference for the life of continued freedom?

The alternative to Grab the Oil is to dispense with the hobbling dependency on oil itself and to quickly wean the country off of it. Call it the path of Energy Reconfiguration. It is to declare a modern day Manhattan Project aimed at minimizing the draw down in the world’s finite stocks of oil, extending their life, and mitigating the calamity inherent in their rapid exhaustion. It means building a physical infrastructure to the economy that is based on an alternative to oil. And it means doing this, not unilaterally or militarily as the US is doing now, but in peaceful partnership with other countries of the world, the other counties in our shared global lifeboat that are also threatened by the end of oil.

In more specific terms, energy reconfiguration means retrofitting all of the nation’s buildings, both commercial and residential, to double their energy efficiency. It means a crash program to shift the transportation system—cars, trucks—to a basis that uses perhaps half as much oil per year. This is well within reach of current technology. Energy Reconfiguration means using biotechnology to develop crops that require much less fertilizers, pesticides, herbicides and machinery to harvest. It means refitting industrial and commercial processes—lighting, heating, appliances, automation, etc.—so that they, too, consume far less energy than they do today. It means increasing efficiency, reducing consumption, and building sustainable, long-term alternatives in every arena in which the economy uses oil.

Such a program would return incalculable benefits to national security, the economy, and to the environment.

In terms of national security, Energy Reconfiguration greatly reduces the county’s susceptibility to oil blackmail. It reduces the need for provocative adventurism into foreign countries in pursuit of oil. As such, it reduces the incentive for terrorism against the US. And by reducing such threats, it reduces the need for a sprawling, expensive military abroad and a repressive police state at home. Savings in military costs—perhaps on the order of hundreds of billions of dollars a year—could well pay for such a program. The saving of democracy, of course, is priceless.

The economic benefits are at least equally impressive. By reducing energy imports, the US would reduce its hemorrhaging trade deficit and the mortgaging of the nation’s future that such borrowing implies. A national corps of workers set to retrofitting the nation’s homes and businesses for energy efficiency would address employment problems for decades in a way that could not be outsourced to Mexico or India or China. And a more efficient industrial infrastructure would make all goods made in America more competitive with those made abroad. In all of these ways, Energy Reconfiguration raises, not lowers, the average standard of living while increasing the resilience of the economy as a whole.

Energy Reconfiguration also delivers enormous—perhaps incalculable—benefits to the environment. By reducing energy intensity, it reduces the impact on the biotic carrying systems of any level of economic activity. Global warming may be the single most potent threat to global stability today. A recently leaked Pentagon report predicted that rapid climate change may well set off global competition for food and water supplies and, in the worst scenarios, spark nuclear war. If the US did no more than change from being the most energy inefficient economy in the industrial world to being of only average efficiency, it would dramatically slow the environmental destruction that hangs like a sword over the entire world.

Are there any precedents for such an ambitious vision? In the 1980s China adopted a nationwide energy efficiency program. Within a decade, overall energy intensity fell by 50% while economic growth led the developing world. Also in the 1980s, Denmark began a crash program in wind-generated electricity. Today, wind provides 10% of Denmark’s electricity while Denmark makes 60% of all the wind turbines sold in the world. India’s Renewable Energy Development Agency used a similar set of programs beginning in 1987 to reduce oil based electricity usage. Today, India is the largest user of photovoltaic systems in the world.

Even within the US there are ample precedents for optimism. The US economy was 42% more energy efficient in 2000 than it was in the 1970s when the Arab oil embargoes shocked the country into action. Corporate Average Fuel Economy (CAFÉ) standards more than doubled the average mileage of US automobiles between 1975 and 1985 before being effectively abandoned in the late 1980s. The National Research Council has reported that efficiency programs sponsored by the Department of Energy returned $20 for every $1 invested, making them arguably one of the best investments in the economy even before a change in national energy strategy.

We should harbor no illusions, however, that adopting such a strategy will be easy. The military and energy industries in which the Bush family is so heavily invested will vigorously resist such a policy. And the energy bill now making its way through Congress is nothing so much as a testament to the death grip the energy industry holds on the American people. It provides tens of billions of dollars of subsidies and giveaways to energy companies while actually encouraging more intensive energy use. As the poster boy of these leviathans, President Bush expressed their sentiments best: “We need an energy policy that encourages consumption.” What more need be said?

In the end, the choice of these two alternatives—Grab the Oil or Energy Reconfiguration—is much bigger than oil alone. It is a choice about the fundamental ethos and, in fact, the very nature of the country. Most immediately, it is about democracy versus empire. In economic terms, it is about prosperity or poverty. In engineering terms, it is a matter of efficiency over waste. In moral terms this is the choice of sufficiency or gluttony. From the standpoint of the environment, it is a preference for stewardship over continued predation. In the ways the US deals with other countries it is the choice of co-operation versus dominance. And in spiritual terms, it is the choice of hope, freedom and purpose over fear, dependency and despair. In this sense, this is truly the decision that will define the future of America and perhaps the world.

A final word on Pirsig’s monkey. The monkey is doomed but not tragic. For the monkey cannot really comprehend the fateful implications of its choice: that its greed assures its doom. In the case of people and a country, however, that is not the case. It is no accident that President Bush has not asked any sacrifices of the country for his War on Terror. That is part of the seduction, like the candy a drug pusher uses to lure an unsuspecting child.

But we cannot, like the monkey, claim to be unaware of the choice we are making. Awareness of such choices is part of the burden of mature citizenship. Nor can we feign ignorance of the consequences. Simply put, our present course will cost us our country. And our doom will be compounded by incalculable tragedy and what Lincoln once called “the last best hope for mankind” will, indeed, perish from this earth. Unless, that is, we find the vision, the wisdom and the courage to let go that handful of paltry treats and choose freedom instead.

Robert Freeman writes about economics and education. He can be reached at robertfreeman10@yahoo.com.

I think American technology ... and American resources ... will enable us to conjure up some form of energy to replace petroleum. At least it might work here, if not in some other countries.

But the end of petroleum - either as a resource that can be taken from the ground or as a commodity that the world is eager to buy - would mean the end of the death grip that the Moslem world has on our throats. Without their oil money, some of the Arab dictatorships will fall, and most of them won't be able to subsidize terrorist attacks on us or our friends anymore.

The problem is that the alternatives cost more than oil now, so energy will cost more.

Not necessarily. Most of the cost and difficulty with nukes is political. Technically, it can be very cheap, and quite a bit safer than the industries it replaces. With sufficiently cheap nuclear energy, all sorts of options open up for powering our cars. If electricity is cheap enough, even hydrogen fuel cells may become economically viable.

In addition, you have to remember that most of the oil ever found is still in the ground. As technology increases, we go back to those old reserves and pump more out.

Rather humorous that right now, oil price and production is more dependent on technological progress than nuclear (fission) energy is.

I was looking for the correct basic economic evaluation of this story, and you're the first!

The author is an economic ignoramous. Oil does NOT "run out" - it gets more expensive. Then new finds occur because they are now economically feasible.

Then, when alternatives become MORE economically feasible than finding more oil, the alternatives will be developed and used.

The problem with these lefties is that they are ignorant of or despise the free market so much that they can't see its reality and implications.

Couple of thoughts-

1. "Securing" oil supplies is not the same thing as grabbing them- generally when people "grab" something they do not pay for it.

2. I have read some pretty persuasive arguements that the "peak of production" has either been reached, or will be soon. The arguement is NOT that we are running out of oil-merely that the bulk of the oil that can be retrieved with less energy than the oil itself provides has been located. New discoveries may be made...but most likely not on the same magnitude as we have seen in the past. There will still be huge amounts of oil, but increasing demand will boost the price. A lot.

I'm agnostic on this particular idea- don't have enough background to have a firm opinion. It would seem to me, however, that if it was true, oil companies that own the rights to oil fields would cut back production, in anticipation of hugely increased revenue when the price spikes. Who knows.

Regardless,

3. if the arguement in 2 above is correct, efficiency measures etc. will only postpone the inevitable- i.e. if we're heading for a huge upset in the next 10-15 years, what good does postponing it another 10 years do?

If, on the other hand, there are technologies we can develop to wean ourselves off the petro-teat (nuclear, including breeder, polymer "spray-on" photo-voltaics, nanotube capacitors to store electricity with great density) it would seem that trying to keep a strong, dynamic economy would be the best way to bring those technologies online.

I'm not an expert, just someone who's driven past a Holiday Inn. I do seem to recall great gnashing of teeth over the darkness that would descend upon the world (circa 18??) when the whale oil ran out, and lamps would have no fuel. That, and the concern that by 1920, New York City would be three feet deep in horse dung.

Somehow things worked out.

These guys do not get it. Oil is a business. Oil producers are not pirates and we are not a pirate nation. We do not steal oil, oil production is not a conspiracy. We are not hostage to the oil producers. We are not prisoners of OPEC's evil will.

We did not invade Iraq for their oil, we already were buying and reselling their oil. Furthermore, we were invited into their oil industry on the eve of the invasion of Kuwait; we gave up access to Iraq's oil industry when we decided to defend Kuwait. And we consciously gave up access by enforcing the containment of Iraq during the nineties.

Oil is neither cheap nor expensive. It is a commodity, and it sells for the price the market will bring. When its high, more oil comes onto the market, and the price drifts downward. When it is low, drilling slows down until the price firms up again.

OPEC has no power at all over the price of oil. The largest new fields are not under OPEC control, and they dare not withhold oil from the market for more than one reason. The first reason is that these are almost every one centalized economies on the verge of bankruptcy. To cut production is to risk social turmoil and blood in the streets. The second reason is that to cut production is to lose market share. OPEC oil left in the ground is oil replaced by Russian, Mexican, Caspian, and African sources.

And we do not steal oil. We bid against multiple bidders, the best bid wins, the host government takes the lion's share, and at the end of the contract all of the infrastructure and assets revert to the control of the host government who either operates it themselves, or offers it up for bid again.

There are two cases where the host governments have stolen US investments, specifically Mexico 1938 and Venezuela in the early seventies. There was no invasion by US forces, on the contrary, the companies involved negotiated a settlement and went on their way. Actually, in the case of Venezuela, they continue to act as consultants and to offer technical assistance to the new owner of their former property.

This type of impractical idealism is typical of the left. The website is "progressive"--

http://www.commondreams.org/

I recall Dr. Paul Erlich's book from about 1970 titled: "The Population Bomb"

He warned that by now, we'd be swimming in feces-thick rivers, out of oil, smog-covered skies. But worst of all--out of food.

He was wrong. They do this wild extrapolating technique, to scare the bejesus out of regular folks, and to make them get in line with world greenism.

I used to work in energy. Oil & gas production, then engineering & construction. A fact NOT stated in this epistle is that Alberta province alone, has more hydrocarbon reserves than Saudi Arabia.

We may have to "take" that too, from our Canadian buddies up north. Let me predict they will accept $US instead of going to war.

Let me further predict that the US will provide much of the technology for a shift away from oil.

The article is complete idiocy. Even IF there is a depletion of available oil, it would occur gradually and the laws of supply and demand would result in more exploration and discovery. At the same, alternative energy sources (i.e. natural gas), would become more competitive and a switch to the more cost effective fuel would occur. The wonderful thing about capitalism is that it is a self regulating system that compensates for shortages and drives the development of newer more efficient technology. Leftist idiots just don'e get it.

I always find this argument humorous. If oil consumption is cut enough to make a difference, say by 50%, then there will have to be enough price rise to reduce consumption by that much. Otherwise there has to be truly severe rationing, very unpopular with those not getting any gas, and very wasteful because those getting all they "need" have no reason to be economical. The choice is between allocating gas by price or allocating gas by your political connections.

"Restructuring"energy consumption means cutting total energy usage. Who will suffer? Who will gain? Who will decide who gets what, who decides what "to each in accordance to his need" means? I tell you one thing, it will need men with guns.

Will new sources of energy be brought on line? If so, the only option is nuclear. This guy is saying we should increase nuclear power by about seven to ten times.

Shouldn't America be rolling in ill gotten oil?

Only after several years of investments in Iraqi oil fields. The embargoes worked. The Iraqis put very little capital investment in maintining their oil fields. They damaged many of their reservoirs by producing them too quickly. The real advantage to overthrowing Saddam is that a freer (hopefully) and more democratic Iraqi government is more likely to want to produce more oil than OPEC will want them to.

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