September 15 2013
Our Fatal Addiction to Oil
We all know that we live in a volatile world. It looks that, for now, the Syrian situation is going back to the pre- chemical gas stalemate, where neither side can win, but which has created a refugee nightmare which is becoming a burden for you and me because somebody-those who live in the rich countries- has to pay to keep these people alive.
All this will end badly. Assad is still in power, his opposition is still strong, Iran is still developing its nuclear whatever, Sunnis and Shiites still hate each other, the after Gaddafi Libya is still in shambles and Egypt is back to a Mubarak-like regime. The sad truth is that stalemates seldom stay stale.
All this bickering has an economic component because today’s economy, no matter where, totally depends on a steady supply of oil: no oil means death, simple and sure, therefore today oil or the lack thereof is always at the centre of every dispute everywhere. The Bible says that ‘the lust for money is the root of all evil’, today the craving for crude is the cradle of all corruption, including climate change, the world-wide weather weakness.
Yes precious oil is always poking its ugly finger into each global scenario: in Yemen the insurrection there periodically halts oil exports; in Algeria Al Qaeda is slowing foreign investment on the oil patch; the House of Saudi with its 10,000 princes and its prime-grade oil must keep on bribing its spoiled citizens who are soaking up more and more of its own production. Of course the mess started with Iraq, a war that was supposed to pay a dividend and ended up costing trillions. The resulting chaos in MENA – Middle East North Africa- has already taken a million or two barrels of oil off the world markets.
At the fringes of the core, on the edges of Europe, Australia and North America, real problems are crawling upward and are affecting the heartbeat of the mighty nations. At the periphery climate change and excessive population growth are cutting into the food and water supply, while medieval cultural practices are increasingly out of tune with the rest of the world. The temporary presence of easy oil from 1950-2000 has allowed populations to grow far beyond the earth’s carrying capacity.
Gail Tverberg, an actuary, writes an interesting blog. In her latest she writes: “Take Egypt as a prime example. Here we have a civilization that has survived for thousands of years. Their underlying problem today, however, is that there are now about 84 million Egyptians, up from the 2 million or less that got along so well for all those millennia. The Nile simply can’t support a population of this size and the country is already dependent on imported food while continuing to grow at a breakneck pace. This was OK for a while, except that Egypt can no longer afford to pay for their imported wheat, or their oil for that matter, and are dependent on the richer Gulf Arabs for handouts.”
Egypt used to export oil, but now its population consumes the 700,000 b/d the country produces. No export means no income. No income means being dependent on Saudi charity to keep the lights on and the tractors traveling. The Suez Canal brings in some tolls, but the unrest in the country has kept tourists away.
Internal troubles in the OPEC countries and mushrooming domestic consumption there are slowly taking a toll on the world’s oil supply. True, the USA has its growing domestic production – see my column on ‘fracking’ – but it still amounts to less than half the unplanned drop in Middle Eastern production, which means that Peaking Oil Prices are still with us. Last time I looked world oil was well above $110 per barrel.
Why is it so high? Some of this is due to concerns about what will happen if the growing unrest in Syria keeps going, but the rest is due to slowly tightening supply/demand situation around the world. The Chinese are still consuming oil at an increasing pace and the world is still adding about 70 million new “oil consumers” to its population each year. As I pointed out a few weeks ago fracking in North Dakota and Texas is not nearly enough to offset the waning supplies available outside the oil-producing countries in the Middle East and elsewhere.
Syria, even if there were no civil war there, would still be in deep economic trouble. All was fine as long as oil production was increasing. By exporting oil the money earned could be used to fund food subsidies, education, and building highways. In 1980 Syria had 8.8 million peaceful citizens and plenty of oil to spare. Now it has 22.8 million rebellious skeptics and decreasing supplies of oil, not enough to keep up the standard of living. Due to the unrest in Egypt, Syria and Libya the production of this precious commodity combined with normal depletion has dropped dramatically.
There is no reason for the West to be complacent. What is happening at the edges of the empire – our Western world is a capitalist empire – will soon happen to all of us as well. That’s how the Roman Empire started to crumble. When its legions no longer could protect its far flung borders, its fall was not far away. In 1980 Kenneth Boulding, himself an economist, wrote: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.” Yet growth must be continued at all cost, even if the cost is war which proves that we live in a mad world. Eventually an all-out war will be the only avenue left. And that war will be about oil. That makes our addiction to oil fatal.
War may not happen in this round with Syria, but the situation is far from stable. Syria cannot solve its problems by itself. The only solution is to have a strong peacekeeping mission with the USA leading the rescue. In other words the very thing that the USA wants to avoid: no boots on the ground. This step depends on Iran which has its own agenda including nuclear ambitions something the USA and Israel will not allow even though Israel has this destructive capability. If ever the Royal House of Saudi will see an internal revolt threatening the export of eight million barrels per day, there is no doubt that the USA will intervene.
Oil is the new currency. It takes millions of years to form, while money can be created out of nothing. The past 5 years, ever since the Lehman Bros demise, the USA treasury has created as much as 5 trillion dollars by simply typing in some figures on a computer screen. This means that money has become something delusional. It can be created ex nihilo, but once it is magically called into being it is a debt which must be repaid: easy come, hard to repay. Oil, on the other hand is real and embodies everything that is bad. It is highly addictive, much more so than money. Oil is the ultimate danger: we are hooked on oil because each one of us has at our disposal 100 slaves 24/7/365. We simply can no longer live without them. We have heat or cooling at the flick of a finger; we can call upon hundreds of horsepower by merely stepping on the gas pedal; we travel anywhere in the world in total ease within 24 hours. A world without oil is no longer feasible.
The USA Department of Energy in a recent report predicts that global energy use will continue to rise rapidly, with total world consumption jumping from 524 quadrillion British thermal units (BTUs) in 2010 to an estimated 820 quadrillion in 2040, a net increase of 56%. (A BTU is the amount of energy needed to heat one pound of water by one degree Fahrenheit.) China, which only recently overtook the United States as the world’s leading energy consumer, will account for the largest share — 40% — of the growth in global consumption over the next 30 years. We know that this means: coal consumption will skyrocket.
The consequences for the global economy, world politics, and the health and well-being of the planetary environment will be staggering. To meet ever expanding world requirements, energy producers will be compelled to ramp up production of every kind of fossil fuel at a time of mounting concern about the ultra-dangerous role those carbon fuels play in fostering runaway climate change. Meanwhile, the shift in the center of gravity of energy consumption from the older industrial powers to the developing world will lead to intense competition for access to available supplies. Apparently, just as economists believe in perpetual growth, bureaucrats believe that the planet can absorb infinite amounts of pollutants without any repercussions.
This simply means that the world is in the grip of evil. We are hooked on sin – because anything that harms creation is sin. Writes Friedrich Nietzsche in Thus spoke Zarathustra: “Once the sin against God was the greatest sin; but God died, and these sinners died with him. To sin against the earth is now the most dreadful thing.” Sinning against the earth carries its own punishment, as we are rapidly discovering. We are setting ourselves up for the ultimate cataclysm, which will come without warning once there is a tipping point.
Lack of love for God, expressed in lack of love for his creation, is a sin against the first and greatest commandment: “You shall love the Lord your God with all your heart and with all your soul and with all your mind.” In Matthew 22: 37 Jesus quotes this text as recorded Deuteronomy 6:4. This all-important statement there – which touches upon the heart of the gospel – is preceded by these revealing words: “The Lord our God is One”. That simply means that God is what he says and what he does. Creation is God’s visible part. We express our love for God by loving his creation. We love great artists and show this by admiring and cherishing their masterpieces. Creation is God’s masterpiece: nothing remotely can be compared to the world and what it contains, including us, the human species – which we have to love as ourselves. Since God is invisible and a spirit, the best way to love God is to love his creation: it trumps all other means to love God. (Romans 1:20)
Jacques Ellul, professor of law at Bordeaux France, picks up on that. In his book Money and Power (l’Homme et l’Argent) he writes that “In the Bible love is utterly totalitarian. It comes from the entire person; it involves the whole person and binds the whole person without distinction. Love reaches down into the roots of human beings and does not leave them intact. It leads to identification and assimilation between the lover and the beloved (in this case creation). Love for money is not a lesser relationship. By this love, we join ourselves to money’s fate. “For where your treasure is, there will be your heart as well (Matt. 6:21).” Our treasure is oil. Substitute oil for money, and, writes Ellul, ‘this attachment pushes us headlong into nothingness.’
Oil is today’s currency. We can live without money for a while. We can’t live without oil. Our fatal addiction to oil will do our undoing.
The Second Coming
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?
William Butler Yeats (1865-1939)