End of the Age of Oil
By: Dr. Elias Akleh*
Humanity is facing, now-a-days, the beginning of the biggest and the most severe global crisis in its history. This crisis will touch the lives of all nations and will change the course of their history. It will destroy the economies of nations, overhaul global politics, incite extreme competitions, provoke power struggles, and break out devastating wars among nations. The savage wars against Afghanistan and against Iraq are just precursors to the world wars to come. This crisis is the end of the age of oil.
Many studies are pointing to the fact that oil wells are peaking; they have reached the peak of their output and are now declining at an alarming rate. Geological research indicates that world oil reserve is depleting rapidly and will soon be exhausted. World political leaders cannot ignore this fact any more and they have to deal with it soon whether they are ready for it or not. Peak oil is becoming the world’s number one problem, far more serious than the problem of global warming.
Oil is the source of energy that we use to run our machinery, to light our homes and cities, to run transportation systems connecting people to each other, and transporting goods and food from one part of the world to other parts. Oil is the dynamo that keeps our factories running, our industry flourishing and our economy thriving. Oil is the builder of civilizations; its byproducts are the essential building blocks of every avenue of our lives such as medicine for our health, fertilizers for our food, plastic that we rely on for the majority of our products, and for gas to run all types of our transportation devices starting from the simple mopeds to the sophisticated space crafts.
World oil reserve is finite and is not recyclable. Man’s rapid consumption of oil is leading to a rapid depletion, and production would stop when the process becomes unprofitable and non-economical. Then lights will be switched off for ever. Oil peak has been an expected crisis since 1950s when geologist Marion Hubbert announced the unavoidable decline of oil fields, and predicted the 1970 American oil peak. Yet nations kept on building oil dependent economies since oil was relatively cheaper, and ignored building up on alternatives sources of energy.
Due to higher gas prices at gas-station during the last three years some people started to become aware of the oil shortage crisis. World leaders started looking into the matter. Finance chiefs from the Group of Seven (G7) – US, Britain, Canada, France, Germany, Italy, and Japan – had dedicated their April 16th meeting to discuss high oil prices. The IMF with its 184 country members had also expressed concern about peak oil. This was initiated by the April 12th news of the irreversible decline of Saudi’s biggest oil field -Gharwar - the world’s biggest field, besides the 27% projected decline from the other existing fields. According to Saudi Aramco’s own statistics, the existing Saudi oil fields deplete by 600 – 800 thousands barrel per day (bpd) each year.
Indonesia was the biggest oil producer in Southeast Asia. It is now experiencing a steady decline of its oil output that went down from 1.52 million bpd in 1999 to 1.07 million bpd in 2003. Indonesia has no more oil fields to discover. Its oil output does not meet its local demand any more, and it started to import oil.
Oil shortage has also been seen in Iran, another major oil importer. Iran’s major oil field – Aghajari – used to output 1 million bpd in the 1970s. Now it barely outputs 200 million bpd. Iran is trying to boost its output to 300 million bpd by injecting natural gas into its field. Iran’s total oil output from all its fields comes to about 4 million bpd.
Similar news of other oil fields peaking is coming out from every oil producing nation. Oil companies are downsizing its oil reserve; last year Shell announced 20% loss of its reserve. Saudi Aramco dropped its expected output from 12 million bpd announced in 1978 to a maximum of only 9.8 million bpd. The Energy Institute in London had published an analysis in its “Petroleum Review” magazine stating that oil output from 18 significant oil producing countries – producing almost 29% of world production- had declined by 1.14 million bpd at the end of 2003. OPEC oil output had fell from a rate of 24.7 million bpd in 1977 to 22.1 million bpd by end of 2003 according to latest report of BP Statistical Review of World Energy.
The number of new oil discoveries in the world had dived sharply to the bottom. In year 2000 there were 16 new major discoveries, in 2001 there were eight, in 2002 there were only three, and by the end of 2003 the number went down to zero. Yet demand for oil had exponentially increased. As the living standards improve in India, China, and other developing countries, oil demand is increasing. Due to severe depletion of oil and to surging global demand prices will sky rocket rapidly. CIBC World Markets Inc. expected crude prices to reach $77 a barrel in the next five years and as high as $100 a barrel by year 2010.
While the crisis of oil depletion is descending upon us, global oil corporations and their crony politicians are trying to brush the facts aside in a purposeful denial and assure the people that there are plenty of oil reserves to last for long time. By denying the existence of oil crisis they are hoping to postpone the inevitable rush of other nations to acquire as much oil as possible so that they, themselves, would have more time to acquire and to control as much oil resources as possible. The competition had become so severe that led to regional wars. No body has any doubt that American invasion of Afghanistan and of Iraq was for oil. Afghanistan is located in the path of oil and gas pipelines from the Caspian region to India, China, and Japan. Iraq has the second largest oil reserve after Saudi Arabia. It is swimming in a sea of oil, and its fields have not yet peaked. The potential of discovering more oil fields in Iraq is very promising. Iraq’s oil would supply enough gas to the American military machinery in its conquest of Southeast Asian region.
Iran’s potential of boosting its oil output by another 3 million bpd has made it another target for American hegemony. United States had built military bases encircling Iran. The American administration is building nine new military bases in the Afghan provinces of Helmand, Herat, Mimrouz, Balkh, Khost and Paktia. The US is spending about $80 million to upgrade its bases at Bagram and Kandahar with new runways. It had paid off Uzbek government to build air bases in Manas and in Qarshi Hanabad. US have also made agreements with Tajikistan, Kazakhistan and Turkmenistan to use their airfields for military operations ostensibly to fight “Islamic terrorists”. Pakistan has allowed American forces to use its commercial airport at Jacobabad and to use bases at Dalbandin and Pasni. With the American battleships in the Persian Gulf Iran’s encirclement becomes complete. The aggregate of these American military bases are setup in a location that allows the US to control the energy-rich regions of the Middle East, Central Asia and South Asia. They are also located centrally to the three growing powers in the area, namely China, India, and Russia.
In its greed for oil the American administration had tried twice unsuccessfully to topple the democratically elected president Hugo Chavez of Venezuela. Venezuela is the largest Latin American oil producer, and supplies the US with over 15% of its oil, making it the fourth largest supplier after Saudi Arabia, Canada and Mexico. Venezuela complained that its contracts with American refineries are profitable only to the American economy while Venezuela gets only the crumbs. Chavez announced that he wants to re-write the contracts to earn higher fees for Venezuela. He also wanted to contract with other oil clients and had struck deals with China and Spain, and made special deals with some neighboring countries especially with Cuba, where he bartered oil for education and medical services without the use of the petrodollar system. After American failure to topple his regime, Chavez built political and economical relationships with Russia, China, India, and Iran in an attempt to protect Venezuela’s vulnerable oil. He is hoping that the BRIC alliance (Brazil, Russia, India, and China) will oppose any possible American invasion of his country. He also threatened to cut off oil supply to the US if the American administration attempts another coup.
Unites States are not the only aggressive seeker after oil. China had recently followed suit. With its economy growing at about 9% a year the Chinese fear oil shortage will become a severe crisis. China’s dependency on imported oil is expected to double within the next generation. The sea between China and Okinawa contains large deposits of oil and gas. Based on the UN Convention on the Law of the Sea that gives coastal countries control over a zone extending 200 nautical miles from its shore, China decided to extract oil from the region. As Chinese oil companies started running their seabed pipeline, Japan objected claiming that Chinese exploration would violate Japanese economic marine zone. Japan has similar disputes over the undersea oil and gas resources with South Korea and with Russia. China had also directed its attention to the western hemisphere competing against US for oil deals with Canada, Mexico and Venezuela.
Factoring in Alberta’s oil sands, Canada could be considered the second largest supply of the remaining oil reserve after Saudi Arabia. The oil sands are estimated to contain about 174 billion barrels of oil, and production is expected to start in early 2007. Canada is a major oil supplier to the US. Lately China National Offshore Oil Corp. had moved in by acquiring 17% of privately held Canadian oil sands company MEG Energy Corp. Chinese are trying to sign contracts for oil that would be sent through a proposed pipeline to the coast of British Columbia and then exported to China. On the other hand the US is hoping the oil sands will be exported south across the border for its own consumption. Although the Canadian pipeline seems promising, it could be stopped by the region’s native Indian tribes, who claim ownership of the pipeline route, and afraid that such pipeline might spoil their hunting ground and threaten their ways of life.
The devastating effects of conflict over oil could be easily seen in Sudan, where genocide is taking place to evacuate the land from its inhabitants to make it easier for oil companies to move in and acquire land cheaply for their exploration. It is believed by many that Sudanese President Taha is financing the Janjaweed to drive the inhabitants out of oil rich Darfur. Economic sanctions, imposed against Sudan since 1999 because of the failed assassinated attempt against the life of the Egyptian president Husni Mubarak, had exacerbated poverty in Sudan. Russia and China play extensive roles in Sudanese oil industry. US is trying to lift the sanctions on Sudan in order to send its oil companies there to compete against Russia and China in oil exploration. Meanwhile genocide continues.
The previous American president Jimmy Carter was aware of the devastating results of oil shortage. He predicted that American dependence on foreign oil would lead to wars in the Middle East to secure that oil. To avoid such wars and deaths on both sides Carter established in 1977 a strategic petroleum reserve. He established America’s first national energy policy encouraging reservation and alternative sources of energy. He encouraged insulation of American homes and the attempts to harvest solar power. In 1979 Carter established plans to decrease American dependence on oil by creating a “solar bank”. Unfortunately when Reagan won the election the first thing he did was to remove the solar panels Carter installed on the roof of the White House, and reversed Carter’s energy policies. Reagan was supported by oil corporations, who are interested in making profits even at the expense of the environment and of human lives, and not interested in solving the energy crisis.
*Dr. Elias Akleh is an Arab writer from a Palestinian descent, born in the town of Beit-Jala and lives in the US.