“Government Deluded About Future Oil Supply”

Thu, 28 Oct 2004

“Government Deluded About Future Oil Supply”

At 12:08 a.m. 28/10/2004 +0000, Todd Simmiss wrote to the RunningOnEmpty egroup…

“Are the IEA just dumb or what? I mean really, this is ludicrous, where do they expect the extra oil to come from?? Like the President of OPEC said himself a few months back; 'There is no more supply'!

cheers,

Todd Simmiss Palmerston North”

RESPONSE – SUMMARY

New Zealand is not preparing for the petroleum energy decline because, like most governments, it relies on the speculative theoretical forecasts produced by (non-geologist) economists of the International Energy Agency (IEA).

Therefore, with the Middle East oil fields now at final 99% output capacity and expected by geologists to expire and decline forever from about now on, all NZ Government's current forecasts and planning are still based on an loony theoretical US$20 a barrel price for crude oil.

Despite an undisputed, 40-year trend of decreasing discovery of crude oil, the IEA says that the supply of oil will continue to grow forever because...

(a) It 'always has grown’ as the human population and oil consumption increased, devouring the huge ‘pond’ of crude oil discovered before 1973, which is 80% of current daily oil supply.

(b) Demand ‘requires it to increase'. Standard economic theory insists that demand will always met by supply, assuming humans are infinitely resourceful in producing alternatives. To colourfully illustrate the principle: When you exhaust a planet, you theoretically just need to purchase an alternative planet from a planet shop that will naturally set up to meet demand.

(c) Funded by the politicians of many governments, the IEA is expected to ‘look on the bright side’. It doesn’t want to be ‘negative and unpopular’. So it prefers to simply extrapolate the growth of oil supply to match the demand curve. Billions of geology-ignorant world citizens will never be able to prove the forecast wrong, and will keep paying them for their cheery, ‘positive’ forecasts. That is, until now when the oil starts to run out and the price climbs hugely. Even now, it’s very easy to cloak the decline by referring to oil field sabotage and Florida wind storms.

DETAILS – SUPPORTING EVIDENCE

Here is Dr. Colin Campbell's explanation:

From: Dr Colin Campbell, world's foremost expert in petroleum depletion http://www.peakoil.net/Default.htm “In the aftermath of the oil shocks of the seventies, Kissinger established the International Energy Agency, which has a headquarters in Paris, and it belongs to the OECD governments I don’t know how exactly many, about 20 or so governments have funded this thing. And its mandate they set it up with a treaty, which is an excellent treaty it was instructed to study resource constraints, look at the evolving position, and be prepared for interruptions. And in those days they were pictured as deliberate short-term interruptions of a political nature, but even so the mandate was to study security of supply. They were given executive powers over strategic stocks, because at that time the western countries felt obliged to have stocks to meet short-term interruption of ninety days, I think, and so the IEA administers this.

But the IEA itself has not studied the resource base. This is an obvious starting point for anybody concerned with security of the supply, is to study the resource base. It seems so obvious, but they don’t do it. They have denied themselves access to the industry database, which they could certainly afford, and they put out these reports every year written in the blandest of tones - 'business as usual' is the great theme they extrapolate linearly the trends of the past. But it’s rather interesting that two years ago there was an element within the IEA, who understood the situation as clearly as anyone would who had knowledge of it. And they contrived, and they managed to put out a coded message, one could say. And they did this first in a report to the G8 ministers, and the text was as bland as usual there was nothing exceptional about the text you could skim through this and put it back in the brief case, and feel content. But within this thing was a table, which showed a projection of demand out to 2020, which was going to rise at 2 percent a year, and I think 1.5 percent a year, to 112 billion barrels.

And then they showed where it was going to come from there was a list there of conventional oil, Middle East, non-conventional, refinery gains, and so on, and so forth. Non-conventional oil, let’s just look at that for a minute. It was shown to rise this is the unconventional oil, meaning the tar sands of Canada, and so forth rise to 2.4 million barrels a day by 2010, and that was apparently perceived to be the limit. It was kind of right that there should be a limit, because the problems with digging up this sort of stuff get exponentially more difficult. So to have a rise up to 2010, and then see a flattening off, sounds reasonable.

And they went through all of this and then at the bottom of the list of where it was coming from there was an item called “balancing item”, described as 'unidentified unconventional'. Well, casually looking through this long list of places, no one particularly could notice this 'unidentified unconventional' oil - "what’s that?" - nobody knows. And so it passed through, and no one in the IEA the mandarins there presumably didn’t notice this and it got out, and then the conspirators within managed to get it into their 1998 report. But of course it doesn’t take a moments thought to realise, unidentified considering that the identified is already enormous and it isn’t the question of identification, it is the question of extraction rate that matters.

And so to have this enormous amount, and it rose from zero in 2010 to 19 million barrels a day by 2020, there’s a huge increase of this unidentified mysterious substance - not explained in any sense - was a euphemism for shortage. And of course it didn’t take the journalist too long to smoke this out, with a little bit of help one must admit, and at first they were quite pleased that their coded message had been decoded. Because they said, we can’t say it directly, but we’re glad we managed to get it out in this way.

But then these particular people left the organisation, and they went back to their old ways, and now they were able to do so, because they were able to hide under the skirts of the United States Geological Survey (USGS), who’s come out with this completely flawed study - although couched in the most scientific terms, which gives abundant oil for the foreseeable future, and under this skirt the IEA was able to hide. And so in the next issue of their famous report, this mysterious, but very large item had disappeared without trace, or explanation, or anything, to be happily taken up by non-OPEC oil or something - I forget exactly where they put it.

I in fact contacted the Irish government, not so long ago, to ask them what their position was on all of this and the man said, well you see Ireland is a small country and we don’t have any particular expertise in this oil, and we’re a member of the International Energy Agency and so we base our policies on what this organisation tells us. So we see here this completely useless organisation, that has manifestly failed to live up to the responsibilities set for it under the treaty that established it. I mean it’s failed it’s probably deliberately failed, because the economics ministries of its owners don’t really want to hear. It puts out these flawed studies, which are then taken as the gospel for the member countries.

No one in Ireland could possibly be accused of having failed to address Ireland’s own energy problems, if he can say, well I based my judgement on this international organisation given their eminent respectability, what more could I do. So this is a happy way for the governments to evade this issue, and in political terms it’s a difficult one, because it’s much easier for a politician to react to a crisis or an act of god, or still better some kind of intervention by the Arabs, or something like that.

That’s something that people can understand that this came out of the clear blue sky, and you know it’s a crisis and we’ve got to react to it. But to sit in the cold light of day and anticipate a crisis, which anyone could do with a minimum of effort, that doesn’t fit the political world, I’m afraid, it’s one of the flaws of democracy - it doesn’t like to look ahead very well.

So that’s the government reaction to all of this.”

ENDS

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