The IEA announced the world is going to become increasingly reliant on OPEC for oil, more accurately the Persian Gulf, as other members of OPEC will soon enough be formerly petroleum exporting countries. The WSJ writes,
The global dependency on the members of the Organization of Petroleum Exporting Countries for oil will rise in the next five to 10 years as production by non-OPEC nations declines, the chief of the International Energy Agency said Friday.
“We have seen an increase in non-OPEC supplies. But in the mid-term, non-OPEC production will decline,” Nobuo Tanaka, the agency’s executive director, told reporters on the sidelines of a conference. “So, dependency on OPEC oil will increase.”
OPEC’s 12 members, who include Saudi Arabia, the United Arab Emirates and Kuwait, account for about 40% of the global oil (production).
So, I guess a trend that’s been going on for over three decades is news. The increase in non-opec supply is almost entirely due to the global economic contraction. Here’s some better numbers, not that numbers have any relation to economic reality these days, nonetheless, the countries around the Persian Gulf have 60% of known global oil reserves — speaking of unreal numbers — while, the EU, the US, China and Japan, who conveniently enough account for 60% of the world’s economy have only 9% of the world’s remaining oil reserves, and if you cut the US out of that equation it would drop to 3%.
The entire corporate globalization experiment of the past few decades is built on the premise of cheap oil. The entire global “oil market”, increasingly unable to provide cheap oil, is built on the American military, and the American military is built on debt, viagra super active online which each year becomes ever more unsustainable. Now, we could go to the EU, China, and Japan and say you guys need to start kicking-in to pay for our military service, but I doubt that would go over well with anyone, no one’s going to give money without a corresponding increase in say. Or we can begin to realize that the entire corporate globalization experiment, premised on cheap oil, is at best problematic and more accurately a failure. We as a planet need to begin creating a non-oil based economy, that is, we need to truly become post-modern. But when you have an economy, politics, and culture completely addicted to oil, that’s difficult. Instead you get desperation like ethanol and biofuels, which is the equivalent of the addict selling-off the food, furniture, and soon enough the house. Getting off oil is job 1 for any sustained economic revival and that means a complete redesign of our infrastructure.
Cross-posted from Oil is Job 1.
Sibyls were the oracles of ancient Greece. You’d go to them when you had a heavy decision, but the problem was their advise was never straight forward and prone to misinterpretation, not quite as bad as a modern pollster, but they could get you in serious trouble. For example, Croesus a great king of ancient Greece, went to the Delphic Oracle seeking advise about attacking Persia. She replied, “If you attack Persia, a great empire will fall.” He did and a great empire fell, unfortunately for Croesus it was his. Looking at the global economy today, one can’t help but think you’d get a better view of the future from any Sibyl.
Global financial markets are so manipulated and pumped full of discount dollars, they are relatively useless in divining. The US stock market on p/e value is approaching historical highs, while a metal like copper sits near historic highs, despite a global economy that sits well below its peak of two years ago. Now there’s no denying Asian economies led by China started growing again, but how sustainable that growth, considering the faults of over-indulging history has revealed with any command and control economy is truly an important question. The question of over-capacity in female viagra cream China is an important one, and the Chinese have announced they are beginning to shutter smaller steel and electricity plants. you ask, that either matters or it doesn’t. Right now for the Greeks, who need a trip up to Delphi, it matters. For the EU as a whole, it seems to matter too, as growth seems at best spotty. The Japanese remain entrenched in deflation and the American economy appears little better than flat. The most interesting oracle for the modern world is the price of oil, which despite the greatest global slow-down in post-war history managed to stay above $70 a barrel and today sits around $87, which no way helps the global economy as presently structured. Begging the question, what if the global economy gets back to its 2007 peak, where then the price of oil?
Now, if you look at China, India, Australia and the other Asian economies minus Japan, they are a little over 20% of the global economy. Nothing to sneeze at, however a great chunk of that is tied to exporting to what we can call the old global economy, that is the US, Japan, and the EU, which still comprise almost half the global economy. Now the old global economy is drowning in debt, and depending on who
you ask, that either matters or it doesn’t. Right now for the Greeks, who need a trip up to Delphi, it matters. For the EU as a whole, it seems to matter too, as growth seems at best spotty. The Japanese remain entrenched in deflation and the American economy appears little better than flat.
The most interesting oracle for the modern world is the price of oil, which despite the greatest global slow-down in post-war history managed to stay above $70 a barrel and today sits around $87, which no way helps the global economy as presently structured. Begging the question, what if the global economy gets back to its 2007 peak, where then the price of oil?
Cross-posted from Archein: Sybil Economy
We watched the financial system help bring down the economy, but the fact is all finance remains a sideshow to the what is really the main event of modern life — energy. It is the harnessing of fossil fuels for human use that pretty much allows much of what we deem modern. And no nation on the planet has been more proliferate in its use of energy than the United States, thus America for the past hundred years has been equated with modernity. The most important fossil fuel for American modernism has been oil, more accurately cheap oil, and that is becoming increasingly problematic.
America first became aware of its oil dependence back in the 70s, but has done little about it except build its military in attempt to secure the remaining resources. The simple accounting fact is the finding of new sources of oil peaked back in the mid-1960s and has been pretty much a straight line decline every year some. Over the last decade, it has been struggle for the oil industry to even keep discoveries equal to existing use.
States most recent oil program was the occupation of Iraq, and we will not be gone from Iraq until we solve our oil addiction. Stuart Staniford of The Oil Drum has an interesting piece about the redeveloping of Iraq’s oil industry and the Iraqis claim they can eventually pump 12 million barrels a day. This is very hard to believe for many many reasons. It would mean the Iraqis increasing total global production by over 10%. But, let’s say they’re right. It would be good news for the world only in the sense that as Staniford piece points out it gives the world more time to transition away from oil. However, there is no sign of this happening anywhere, particularly in the US, and of course China is going full bore in building their own oil dependence — call it modernity.
Thinking about energy gives a whole new meaning to the term post-modern. Every idea about future economic health needs to be tied to a transition away from oil. The good ideas don’t for the most part include present bio-fuels, particularly the turning of food-stuffs into transportation fuels. The American ethanol program is plain and simple immoral. But there’s other problems with many bio-fuels and the Post has good piece on the problems of increasing bio-fuels with more forest materials.
Energy remains the foundation of any discussion on the economy and it’s future health. One easy way to think, burning isn’t a solution. For America, it means conservation and efficiency foremost, and our waste is of such a horrendous magnitude there’s plenty to gain. The other is the sun and after many years of procrastinating, we seem finally to be getting serious about it. And that’s much better news that any increase in Iraq oil production.