A good piece of what’s left, by the way, will never be extracted. In the fifties we were expending the energy of one barrel of oil to extract twelve. We’re now burning one barrel to get three – the easiest extracted reserves are gone. Soon it will take the energy of one to get two. When it gets to one for one, it’s an act of futility.

A lot of what’s left comes in the form of high-sulfur crude, which is tough to refine; or tar sands or oil shales which first require mining before they can be liquefied for refining (two extra steps) – at which point you begin to wonder if you’re expending the energy of two barrels to recover one – which would be an act of madness.

Among the authorities combining to place global oil production peak in this decade are: ASPO (the Uppsala Hydrocarbon Study Group) chaired by Colin Campbell, retired geologist for Texaco, BP, Amoco and Fina; David L. Goodstein, Caltech; Matt Simmons, chairman of Simmons & Co. International, the chief investment banking firm servicing the world-wide oil industry; Albert Bartlett, professor emeritus, U of Colorado; Jean Laherrere, retired chief geologist for Total; Ken Deffeyes, prof. emeritus of geology, Princeton; Walter Youngquist, retired prof. of Geology at the U of Oregon; L.F. Ivanhoe (I love his name) coordinator of the Hubbert Center for Petroleum Supply Studies in the Dept. of Petroleum Engineering at the Colorado School of Mines; Cutler Cleveland director of the Center for Energy and Environmental Studies at Boston U; David Pimental, prof. emeritus, entomology, ecology and systematics at Cornell – hell, I could fill up five pages.

Most of these guys work with and consult for the industry. Not one of them is a hobo living under a bridge.

Your points.

Point 1:

They don’t require x-ray vision, that’s why they’re geologists. Oil deposits are pretty clearly indicated in the rock formations – which is why no one has ever bothered drilling in Connecticut, or Massachusetts, or eastern Washington, or Maine, Manhattan island, central London or Rome. They mostly go where they’re pretty certain of hitting something. Alaska was first mapped in the late 1940s, talked about in the 1950’s, finally drilled in the 1960s. Deffeyes and others talked about Uganda in the late 1980s, and Idi Amin talked about it as a possibility for exploitation when he was in charge – which is how long ago? Thirty years?

2:

The oil fields in Saudi Arabia were all found by western companies, and were later nationalized. Aramco was originally a consortium of American, Dutch, and British companies. We know what they started with. We know what they’ve taken out. We built their infrastructure. It isn’t that hard.

3:

They aren’t my theses or claims, but I do know something about it. And the Ghawar is the largest field on the planet. It is showing signs, for those who watch for and know how to read them, of depletion. A 55% water cut is NOT good news for the planet’s biggest oil field.

The Saudis aren’t entirely stupid either, you know. Hence the saying: “My grandfather rode a camel, my father drove a car, I ride a limousine, my son flies an airplane; his son will ride a camel.”

4:

Everybody knows exactly what lies beneath Alaska, which is, somewhat oddly, one of the arguments made against drilling in the ANWR. (Read Dianne Feinstein or Teddy Kennedy’s comments.) A big part of the debate has been “it isn’t enough to matter long-term, so why bother to put the ecosystem at risk by drilling?” Go and Google Hubbert, you can see the projection he made about US peak in 1956, which turned out to be accurate. He managed to take into account all new finds, all consumption increases, and came out squarely in the middle of his window. Maybe it was voodoo – but he got it exactly correct, didn’t he? That being the case, we’re sort of forced to assume he knew what he was doing when he moved to the question of world peak. As the industry assumes he was correct. These people aren’t idiots, you know. Hubbert didn’t “stumble” across US peak, and he, Deffeyes and others haven’t “stumbled” across world peak, either.
If you know oil, it isn’t hard to know what’s there. For example the kerogen – dead plant matter, not dinosaurs – was mostly subducted by tectonic forces to between 7,500 and 15,000 feet. At depths below 15,000 feet, pressures are too great and temperatures too high. Therefore 7,500 to 15,000 feet is the oil window, so you don’t need to bother hunting elsewhere. It may, obviously, be found above 7,500 feet, it may even seep to the surface, but you have a narrow and known range to look for it. There are no inexhaustible supplies buried deep beneath the window. There are no unkown reserves. Most of the oil-rich areas of the earth are ancient seas, where the plant matter was laid down. We know where they were. Few surprises.

5:

They know what they’ll find. It’s only “new” to us, it isn’t “new” to the people who spend their lives looking. If they ever start drilling they will sink their shafts squarely into the highest-yielding parts of the field. Amazing! But it won’t have been magic, and it will not have been a lucky guess that they do so. It will have been because they know where they’re going – without x-ray vision.

6:

As noted, it isn’t a surprise. Geologists in the employ of oil companies get paid whatever they can negotiate as a term of employment, like anyone else. Some make millions. Exploration has leveled off, and there is at the moment a glut of oil field geologists, (lots of people went into it in the eighties) so most don’t.

7:

Amtrak is a government corporate entity, and as a place to start it would be easy, he wouldn’t have to fight with a possibly recalcitrant ownership. It is “civilian” only to the extent that it is not “military” – it is government owned. He could in fact sign an order mandating it, and the costs of conversion are low. (They have in fact talked about this, though so far Bush is not on board.)

it was discovered by the geologists years before it was ever begun to be exploited. They knew it was there, and counted it in.

Geologists are not omniscient. They cannot look through the rock and see all the oil there is to be seen.

No one really knows how much oil is left beneath Saudi Arabia, as they regard an actual estimate as a state secret, and Aramco has been issuing flagrantly nonsensical reports for years.

You can’t get the peak of anything until you know the totals. If no one really knows how much oil there is, how can anyone say with any accuracy what time the oil has peaked? I don’t care how you determine the total oil reserves, but how you do it has to be accurate at least.

It accounts for 60% of all the oil ever produced in Saudi Arabia. It currently accounts, all by itself, for 5.5% of the entire planet’s daily production.

You’re talking about total production. Total production does not back up your thesis and claims about total reserve global oil.

He worked up a series of mathematical models based on known US oil reserves

There’s that “known” oil reserves again. Geologists can’t have taken Alaska into account because nobody knows the extent of Alaska’s oil reserves because nobody has bothered to find out. When the variables change, the answer changes, even if the geologist’s equations remain the same. You’d have to explain how geologists can drill a hole in the ground and find out where all the oil is. That would be a valuable trick as it would allow us to find all the oil fields in the world and their reserves instantly.

Whatever’s found in East Africa will not make much difference because it’s already been factored in

Actually, what that means is that since everything has been calculated, it doesn’t matter what they find because people believe it is not going to change their basic equation results.

Anyway, he came up with a new model, which wasn’t that tricky because, geologically the world is pretty well mapped – which is why I’m somewhat skeptical about a new major find in East Africa. Not many surprises left – if any.

Geologists must make a lot of money if they know where oil fields are before oil companies do.

How East Africa can be factored in when it was supposed to be a new surprise that shouldn’t exist, is another thorny question.

We are energy hogs. No one in America will admit to the crime, but we are. Why?

Why no one in America? Because you haven’t been paying attention to Bush’s speeches when he was talking about oil.

You’re saying Bush can sign an executive order telling Amtrack to pull funding from Congress to change their equipment. I can’t buy that, since Amtrack is civilian, not military. Bush’s powers do not include giving money out to whoever he wants in the civilian sector.

Seems to me there is a future in converting by-products of all kinds to biodiesel – if that is what JJ is talking about, then let’s get it on.

However, all the eggs in any one basket seems unwise — we can make liquid fuel from coal with current technology, but the startup costs are high. There is someplace the Feds could do some (financial) encouragement, to keep the fuel mix diversified….

And then there is hydrogen, made from water using nuclear-generated electricity. Some folks think that is the future….I simply don’t know what the future is, but neither does anyone else, which explains why I don’t want anyone empowered to decide and set us all on “that” path. The more options, the better.

We’ll try it again with logical connections and in English.

Rudolf Diesel had a short list of preferred fuels for his engine. Fuel #1 was hemp. Fuel #2 was vegetable oil. #3 was peanut oil. (He demonstrated the engine at the 1900 Paris World Fair running it on peanut oil.)

(It should also be noted that Henry Ford, just for the pure hell of it, built and demonstrated a car made of hemp, that ran on hemp. He had no intention of producing it, he just did it to do it.)

JP Morgan had a ton invested in the nascent petroleum industry. He, as I did manage to say despite distractions, would be damned if he was going to have anybody building engines that ran on something else. He prevailed on Pulitzer and Hearst to run a whole series of “reefer madness” type articles nationwide in their chains of newspapers. (Google Rudolf Diesel, the story’s easy to find.) Which is why, to this day, it is illegal to grow hemp in the US. There are about five million industrial uses for hemp, and we have to import every bit we use while the rest of the world wonders what the hell’s wrong with us. (Though they’re happy to charge us for something we could grow ourselves with zero effort.) Brainless.

So after killing the diesel’s primary fuel, Morgan got his petroleum industry friends to develop a petroleum fuel for diesel engines, thereby short-circuiting Rudolf Diesel’s whole point. So called “diesel fuel” is in fact a by-product of the refining process and, as we all know, it burns incompletely, it stinks, it throws out particulates; it is, not to put too fine a point upon it, crap.

(Though research on diesel engined cars, running on petroleum diesel fuel, has continued. They burn a lot cleaner now, and in Europe the Audi S2 diesel and a model of the VW Jetta diesel are both delivering over 50 miles to the gallon. We don’t allow either of them to be imported. Why? Well, because diesel engines don’t burn cleanly, stink, and throw out particulates!!! Duh! (Either that, or if you could buy a German car that gets 50+ mpg Detroit would be out of business by next Thursday, and we’re being protectionist.))

To finish the Bush thought, Amtrak owns a whole bunch of diesel engines. It is also owned and operated by the government. Therefore it would be no problem for the office of the President – which sits atop said government -to mandate an immediate conversion of all those Amtrak diesels to vegetable oil fuel. This would save several million barrels of oil a year. The trains run on rails, they can’t go wandering off into the hinterlands on a whim of the guy driving, so fuel depots are easy to set up. (And once they were set up along rights-of-way, then Burlington Northern Santa Fe; Southern Pacific; Conrail, and everybody else who uses those rails (and in fact owns them, Amtrak rents) would more or less naturally fall into line and begin converting their own equipment.) Vegetable oil engines don’t pollute much – everybody living near the right-of-way might develop a slight craving for salad – and once we’re manufacturing enough of it, economies of scale will kick in and it’ll cost about thirty cents a gallon.

I live in environmentally-conscious (otherwise, UNconscious) Washington state, and biodiesel pumps are beginning to appear all over the place at gas stations. In Seattle, they’ve converted a bunch of city buses to run on it. The Washington State Ferry System – the world’s largest ferry system (why these idiots won’t just build bridges and be done with it I don’t know) is converting their boats to run it.

Now, they’re all running on what’s called B20 biodiesel, which to my mind is a waste of time. “B20″ means that it’s 80% petroleum, only 20% bio. This is, in the long run, dumb. My personal feeling is, it’s an intermediate step we don’t need to waste time taking. Go right to B100 – 100% bio.

The problem with that is, you do need to replace some parts in the engines to run 100%. Diesel fuel – the petro kind – leaves deposits in the engines and fuel systems. Biodiesel at higher concentrations than B20 scours this out. (B20 does too, but it takes longer, and it is reccommended to change your fuel filters a lot the first few months you run B20.) But, apart from frequent replacement of fuel filters, to run B20 right now, today, you don’t have to do anything at all to the engine. Just pour it in and go. So there’s no cost attached to it, which is why the buses and ferries etc. are taking that route. I shouldn’t complain: It’s a step in the right direction – but as noted, I think an unnecessary one.

To run pure biodiesel, B100 however, you will need to change out some parts in your fuel system, because what makes it a good scourer of sludge also makes it a good eater up of rubber parts, gaskets, etc.; and some plastic parts. You have to change those out to run higher concentrations than B20. This is an easy job, and should take any mechanic about forty minutes, and the new parts will set you back about $75.

George W Bush could mandate Amtrak to begin to do this, as I said, this afternoon. Maybe on diesel railroad engines, which are after all large, we’d have to allow about two hours to change out the parts, and double the budget: $150. He could mandate this. Right now at the pump (in places that have biodiesel pumps) a gallon costs about $5.00 – because there are no economies of scale at work. Not enough is being made. If Amtrak started demanding millions of gallons a year, the economies of scale would appear almost instantaneously, and you’d be filling up for about thirty, thirty-five cents a gallon. He could clean up the air, save millions of barrels of oil annually, and inject a boost into a nascent industry to get it competitive virtually overnight.

But he won’t: he’s a whore for the oil industry.

Ymar, the military can’t convert yet, because they don’t run on rails. They’re deployed all over the world, and biodiesel isn’t. (Yet.) They have to be able to pull up to a pump in outermost Fapistan and fill ‘er up and go. (Same reason they changed sidearms a decade and half ago from .45s to 9 millimeters: spare bullets for nines are everywhere on the planet, spare .45s are uniquely American, and aren’t.)

JG, the choke points are as obvious to you as they are to everyone else – think about it a minute. Miles of pipeline running across empty terrain; northeastern Asia gets all of their oil via the Indian Ocean and then through the —— Strait (look at a map, it’s not hard to figure out but nobody likes to talk about it too openly). It is, however, OK to mention the Strait of Hormuz because the Iranians have tried to close it off twice before and everybody already knows where it is, but all of Iraq and SA’s production has to come through there (which is why either CVN 70, CVN 72, or CVN 74 are always hanging around); and why we have now put a police station in the neighborhood, in Iraq.

The problem, and the real vulnerability is yet to come. That’s going appear when the world really does wake up and twig to the fact that it’s running out. Then you have a real possibility of having some fighting over it, between governments. China and India are trying to get their economies into the 20th century (forget the 21st) and their energy requirements are growing exponentially. That’s the real danger: the coming fight over what’s left.

Oil has been allowed to become so central to everything. Putting it into SUVs so you can go to McDonald’s is an absurd waste of something there’s a limited amount of, something that’s at the core of the entire way of life. We grow food magnificently – thanks to petroleum-based fertilizers. It’s at the core of hundreds of medicines. Nylon, rayon, and fifty other fabrics are petroleum based. Plastic and every other polymer is petroleum based. Most disease control around the planet is petroleum based. It makes so many industries possible. The steel we make today is what it is because of oil.

I have to laugh at people who say: “no blood for oil.” They have no idea how central it is to their whole life, not just to people’s cars. I hate to say it, but oil may in fact be the ONLY thing worth fighting over, given we stay constituted as we are.

Which is why we have to get the hell away from it, at least for stuff like transportation to McDonald’s. Save what’s left for medicine. Growing food. Important stuff.

Oh, and whoever that was who asked: a barrel of oil is in fact not a 55 gallon barrel. A barrel of oil is 42 gallons.

Book, I’m sorry, we’ve really wandered afield here. The only excuse is I think (hope) it’s interesting.

We’ll try it again with logical connections and in English.

Rudolf Diesel had a short list of preferred fuels for his engine. Fuel #1 was hemp. Fuel #2 was vegetable oil. #3 was peanut oil. (He demonstrated the engine at the 1900 Paris World Fair running it on peanut oil.)

(It should also be noted that in 1906 Henry Ford, just for the pure hell of it, built and demonstrated a car made of hemp, that ran on hemp. He had no intention of producing it, he just did it to do it.)

JP Morgan had a ton invested in the nascent petroleum industry. He, as I did manage to say despite distractions, would be damned if he was going to have anybody building engines that ran on something else. He prevailed on Pulitzer and Hearst to run a whole series of “reefer madness” type articles nationwide in their chains of newspapers. (Google Rudolf Diesel, the story’s easy to find.) Which is why, to this day, it is illegal to grow hemp in the US. There are about five million industrial uses for hemp, and we have to iumport every bit we use while the rest of the world wonders what the hell’s wrong with us. (Though they’re happy to charge us for something we could grow ourselves with zero effort.) Brainless.

So after killing the diesel’s primary fuel, Morgan got his petroleum industry friends to develop a petroleum fuel for diesel engines, thereby short-circuiting Rudolf Diesel’s whole point. So called “diesel fuel” is in fact a by-product of the refining process and, as we all know, it burns incompletely, it stinks, it throws out particulates; it is, not to put too fine a point upon it, crap.

(Though research on diesel engined cars, running on petroleum diesel fuel, has continued. They burn a lot cleaner now, and in Europe the Audi S2 diesel and a model of the VW Jetta diesel are both delivering over 50 miles to the gallon. We don’t allow either of them to be imported. Why? Well, because diesel engines don’t burn cleanly, stink, and throw out particulates!!! Duh! (Either that, or if you could buy a German car that gets 50+ mpg Detroit would be out of business by next Thursday, and we’re being protectionist.))

To finish the Bush thought, Amtrak owns a whole bunch of diesel engines. It is also owned and operated by the government. Therefore it would be no problem for the office of the President – which sits atop said government -to mandate an immediate conversion of all those Amtrak diesels to vegetable oil fuel. This would save several million barrels of oil a year. The trains run on rails, they can’t go wandering off into the hinterlands on a whim of the guy driving, so fuel depots are easy to set up. (And once they were set up along rights-of-way, then Burlington Northern Santa Fe; Southern Pacific; Conrail, and everybody else who uses those rails (and in fact owns them, Amtrak rents) would more or less naturally fall into line and begin converting their own equipment.) Vegetable oil engines don’t pollute much – everybody living near the right-of-way might develop a slight craving for salad – and once we’re manufacturing enough of it, economies of scale will kick in and it’ll cost about thirty cents a gallon.

I live in environmentally-conscious (otherwise, UNconscious) Washington state, and biodiesel pumps are beginning to appear all over the place at gas stations. In Seattle, they’ve converted a bunch of city buses to run on it. The Washington State Ferry System – the world’s largest ferry system (why these idiots won’t just build bridges and be done with it I don’t know) is converting their boats to run it.

Now, they’re all running on what’s called B20 biodiesel, which to my mind is a waste of time. “B20″ means that it’s 80% petroleum, only 20% bio. This is, in the long run, dumb. My personal feeling is, it’s an intermediate step we don’t need to waste time taking. Go right to B100 – 100% bio.

The problem with that is, you do need to replace some parts in the engines to run 100%. Diesel fuel – the petro kind – leaves deposits in the engines and fuel systems. Biodiesel at higher concentrations than B20 scours this out. (B20 does too, but it takes longer, and it is reccommended to change your fuel filters a lot the first few months you run B20.) But, apart from frequent replacement of fuel filters, to run B20 right now, today, you don’t have to do anything at all to the engine. Just pour it in and go. So there’s no cost attached to it, which is why the buses and ferries etc. are taking that route. I shouldn’t complain: It’s a step in the right direction – but as noted, I think an unnecessary one.

To run pure biodiesel, B100 however, you will need to change out some parts in your fuel system, because what makes it a good scourer of sludge also makes it a good eater up of rubber parts, gaskets, etc.; and some plastic parts. You have to change those out to run higher concentrations than B20. This is an easy job, and should take any mechanic about forty minutes, and the new parts will set you back about $75.

George W Bush could mandate Amtrak to begin to do this, as I said, this afternoon. Maybe on diesel railroad engines, which are after all large, we’d have to allow about two hours to change out the parts, and double the budget: $150. He could mandate this. Right now at the pump (in places that have biodiesel pumps) a gallon costs about $5.00 – because there are no economies of scale at work. Not enough is being made. If Amtrak started demanding millions of gallons a year, the economies of scale would appear almost instantaneously, and you’d be filling up for about thirty, thirty-five cents a gallon. He could clean up the air, save millions of barrels of oil annually, and inject a boost into a nascent industry to get it competitive virtually overnight.

But he won’t: he’s a whore for the oil industry.

Ymar, the military can’t convert yet, because they don’t run on rails. They’re deployed all over the world, and biodiesel isn’t. (Yet.) They have to be able to pull up to a pump in outermost Fapistan and fill ‘er up and go. (Same reason they changed sidearms a decade and half ago from .45s to 9 millimeters: spare bullets for nines are everywhere on the planet, spare .45s are uniquely American, and aren’t.)

JG, the choke points are as obvious to you as they are to everyone else – think about it a minute. Miles of pipeline running across empty terrain; northeastern Asia gets all of their oil via the Indian Ocean and then through the —— Strait (look at a map, it’s not hard to figure out but nobody likes to talk about it too openly). It is, however, OK to mention the Strait of Hormuz because the Iranians have tried to close it off twice before and everybody already knows where it is, but all of Iraq and SA’s production has to come through there (which is why either CVN 70, CVN 72, or CVN 74 are always hanging around); and why we have now put a police station in the neighborhood, in Iraq.

The problem, and the real vulnerability is yet to come. That’s going appear when the world really does wake up and twig to the fact that it’s running out. Then you have a real possibility of having some fighting over it, between governments. China and India are trying to get their economies into the 20th century (forget the 21st) and their energy requirements are growing exponentially. That’s the real danger: the coming fight over what’s left.

Oil has been allowed to become so central to everything. Putting it into SUVs so you can go to McDonald’s is an absurd waste of something there’s a limited amount of, that’s at the core of the entire way of life. We grow food magnificently – thanks to petroleum-based fertilizers. It’s at the core of hundreds of medicines. Nylon, rayon, and fifty other fabrics are petroleum based. Plastic is petroleum based. Most disease control around the planet is petroleum based. It makes so many industries possible. The steel we make today is what it is because of oil.

I have to laugh at people who say: “no blood for oil.” They have no idea how central it is to their life, not just to people’s cars. I hate to say it, but oil may in fact be the ONLY thing worth fighting over, given we stay constituted as we are.

Which is why we have to get the hell away from it, at least for stuff like transportation to McDonald’s. Save what’s left for medicine. Growing food. Important stuff.

Book, I’m sorry, we’ve really wandered afield here. The only excuse is I think (hope) it’s interesting.

We are energy hogs. No one in America will admit to the crime, but we are. Why?

Some of it is stupidity; some of it hedonism; some of it greed. I agree some is politics.

Today’s oil industry is reaping tremendous bucks because of its acknowledged vulnerabilities to interruptions in supplies. I would think any jihadist, Iran especially, would mark the oil supply as a number 1 target.

Perhaps JJ can comment on some the vulnerabilities of the industry.
I know a few facts: Saudi Arabia sits next to Iran, as do main oil seaways. Container ships are fat targets on the high seas as well. Oil drilling platforms worldwide make perfect terrorist targets (as Nigeria has demonstrated).

Does the industry/Western governments/oil producing nations have strategies to protect these sources/lifelines, do you think? What ones?

The total planetray endowment of conventional liquid oil was roughly 2 trillion barrels before it began being exploited. Since the mid-nineteenth century the world has burned through roughly 1 trillion, pretty close to half, and also that’s the half that’s easiest to get: high quality (light, sweet) crude that’s on or close to the surface. What remains is harder (read more expensive) to get out, and lower quality. Often enough, semi-solid.

Worldwide discovery of oil peaked in 1964. It’s followed a quite firm downward trend since. Alaska has made no difference: it was discovered by the geologists years before it was ever begun to be exploited. They knew it was there, and counted it in.

The rate of use has accelerated tremendously since 1950, and the world is now using 27 billion barrels a year. If every last drop of the remaining 1 trillion or so could be extracted at current costs and current rates of production, well, you figure it out.

60% of what’s left is in the Middle East. The US possesses 3% of what’s left, but uses 25% of daily world-wide production. The US passed peak in 1970, our high in production was roughly 11.3 million barrels a day – we are now producing a hair above 5 million barrels a day. (You only see the peak in retrospect.)

No one really knows how much oil is left beneath Saudi Arabia, as they regard an actual estimate as a state secret, and Aramco has been issuing flagrantly nonsensical reports for years. (But – we discovered the fields, remember, and have a fair idea of what they started with.) Aramco has been generally tending to overstate reserves,because OPEC quotas are based on reserves, and the higher the estimate the more they’re able to pump out of the ground and sell.

There are reasons to believe that Arabia may have entered the peak phase, and may in fact have passed it. 2003 was an interesting year. Iraq was out of business effectively, and both Nigeria and Venezuala were paralyzed by civil disorder. Saudi Arabia said they would open the taps a llittle wider to make up for these circumstances – and they did not.

There is a large body of opinion in the industry (though it keeps a low profile, for obvious reasons) that they did not because they could not: they were already flowing wide open.

In summer of 2004 there were further signs of trouble on the Saudi horizon. Oil was spiking at that time (toward US$50 a barrel – the good old days!)and the Saudis made promise after promise after promise to ramp up production. They didn’t/couldn’t. (In fact in August of 2004 production fell by about half a million barrels.)

The largest single oilfield in Saudi Arabia – and the world – is the Ghawar. It accounts for 60% of all the oil ever produced in Saudi Arabia. It currently accounts, all by itself, for 5.5% of the entire planet’s daily production. By 2004 it was showing signs of moving into depletion. (Institute for the Analysis of Global Security, 3/31/04, or go to http://www.aigs.org) For decades Aramco has injected seawater into the field as a means of raising pressure to force the oil out. It is currently injecting an absolutely beyond belief 7 million barrels of seawater a day. By the summer of 2004 the water cut was estimated to be 55% of what they were pulling out. (This means that more than half of what they were getting out of the ground in Ghawar was the seawater they were injecting. This is called diminishing returns. Not good.)

Now the Saudis have promised, in the light of BP’s brilliant pipeline inspection techniques, that they will again ramp up production to make up the difference. No one in the industry believes it this time. Many people in the industry believe that they are at full capacity, and that’s it.

There was a very upsetting fellow out there by the name of M. King Hubbert. He died in 1989, after a lifetime as a geologist for the US Geological Survey, followed by being chief of researchg for Shell through the 1950s and into the ’60’s. He worked up a series of mathematical models based on known US oil reserves, rates of production, rates of consumption; and in 1956 he said that US production would peak sometime between 1966 and 1972. Everybody laughed – but it did in 1970. Once it peaks, production enters an inexorable decline, which Hubbert plotted out for everyone’s benefit on a simple bell curve. Right up until 1971 everybody laughed.

Hubbert lived a long time. After the first OPEC price shock in 1973 he continued researching oil depletion, with an eye to the world peak. Trickier because, as noted, companies and nations tend to be cagey about what they have. (Although in the oil community word always gets out. It’s a small world, the world of oil people. And most of the world’s oil in fact comes from a dozen huge fields, called, appropriately enough, “elephants.” There are only ten of them. It isn’t that tough to monitor. Ghawar is the biggest.)

Anyway, he came up with a new model, which wasn’t that tricky because, geologically the world is pretty well mapped – which is why I’m somewhat skeptical about a new major find in East Africa. Not many surprises left – if any. Discovery of new fields peaked in the 1960s, and has been declining since. Putting all this into his model, Hubbert initially estimated the world peak would be between 1999 and 2000. Subsequent tweaking of his model after his death by Kenneth Deffeyes of Princeton, Colin Campbell of Shell, and Bert Bartlett of the U. of Colorado put peak somewhere between 2000 and 2010. (Deffeyes says 2005, Campbell says 2007. The difference isn’t consequential.)

So we’re either near, at, or just past peak. Whatever’s found in East Africa will not make much difference because it’s already been factored in – if we’re hearing about it now, the geologists knew about it a decade ago. Deffeyes and Campbell knew about it well before it hit the news. Just like they know all about ANWR and what’s there, without needing to do more than drill a test hole.

R & D on diesel engines was done over a hundred years ago. They were built to run on vegetable oil, that takes no R & D, that was Rudolf Diesel’s point. What we know as “diesel fuel” is a byproduct of the refining process, and it only came into being because JP Morgan was heavily invested in oil, and his pals Joe Pulitzer and WR Hearst inveighed against hemp (which is why we cannot grow hemp in this country to this day – you might start smoking it)and Morgan got the poil industry to come up with this smelly crap called “diesel fuel” – he was protecting his investment and didn’t want any kind of engine running on a non-petroleum product.

Forget the military – if Bush wasn’t a wholly-owned subsidiary of the oil industry he could sign an order this evening to begin converting every engine Amtrak owns to biodiesel, conversion to be completed by the end of September (takes about forty minutes and about $75 worth of parts to convert an engine)and henceforward there’d be a lot less pollution on the railroads. The government owns Amtrak, all it would take would be a stroke of his pen.

The bad history part comes in when they started saying peak oil had been achieved 20 years then, then 30 years ago. So pardon me if I disbelieve all these fake alarms. They were saying half the oil was gone even when they didn’t know where all the oil reserves were at. And kept saying it when Alaska wasn’t even developed.

The final part is just pure economics. When there is oil, oil will be used. Even if it was half over, and you could convince people of that fact, they would still use it because the economic costs of converting to a new technological line is exorbitant. If the government wanted to R and D these vegetable oil engines for the military, that would be another thing, but that’s a long shot.

So now we see why Hugo Chavez is on a whirl-wind tour, signing contracts with the despots of the world for his gas

Most communists skipped business school. The Citgo-PDVSA tankers going to China will take 40 days, as compared to three to four days across the Gulf of Mexico. Chavez will lose $6-$8 a barrel on that deal. Maybe more, because of the empty return trips of the expensive tankers.

I can almost hear a “big gulp” from Chavez and his Marxist friends as the public becomes aware of where Citgo profits are going. Good Web site. Visit mine at http://sadbastards.wordpress.com