If you’re insolent enough to seek the truth, you might just come out ahead in this mess.
For years, global governments have built up a wall of deceit to shelter the public from the reality of the end of oil.
And for years, scientists and institutions not beholden to shareholders or constituents have tried to sound the alarm with muted results.
But several events in the past few months have proven the most powerful governments in the world have known about Peak Oil for years. They’ve been intentionally downplaying it. And they have no idea what to do about it…
It’s not alarmist to say or think the world is running out of oil.
It’s actually one of the most prudent things I can think of.
Behind the Lies
As recently as 2009, the United Kingdom’s official position was that “global oil (and gas) reserves are sufficient to sustain economic growth for the foreseeable future”; also that existing policies put it “in a good position to deal with the longer-term challenge of declining oil reserves.”
The government consistently cited the International Energy Agency’s forecast that Peak Oil wouldn’t occur until 2030, if at all.
Now, after being repeatedly threatened under the Freedom of Information Act, the release of a years-old report shows the UK government has known about imminent Peak Oil and its consequences.
We now know the Labour Government spent six months evaluating the likely impacts of Peak Oil back in 2007. (You can see that research in a PowerPoint recently released by the government.)
As a result of that research, the government was warned of “significant negative economic consequences”, should Peak Oil occur in the short term. The report also noted it was impossible to forecast the exact moment when supply would peak — but there would be global consequences, including “civil unrest”, when it did.
In a worst-case scenario, the peak would happen before 2015. The report’s conclusion stated it is “clear” that:
- Existing fields are maturing;
- The rate of investment in new and existing production is being slowed down by bottlenecks, the economic downturn, and financial crisis; and
- Alternative technologies to oil will take a long time to develop and deploy at scale.
Again, the UK government has had this report for years and has been denying its conclusions the entire time.
Coming to Jesus
Remember, UK officials were only echoing the International Energy Agency in saying Peak Oil could never happen before 2030.
That would be fine — except for the fact the IEA changed its stance in late 2008.
After conducting the first comprehensive study of the annual decline in output from the world’s 800 largest oil fields, the IEA mentioned the word “peak” for the first time in its World Energy Outlook. It also raised the annual decline rate from 3.7% to 6.7% — almost double the previous rate at which it said oil fields were depleting.
After that report was published, IEA Chief Economist Fatih Birol had this to say:
In terms of non-OPEC, we are expecting that in three, four years’ time the production of conventional oil will come to a plateau, and start to decline… In terms of the global picture, assuming that OPEC will invest in a timely manner, global conventional oil can still continue, but we still expect that it will come around 2020 to a plateau as well… I think time is not on our side here.
He must’ve been lying then, too — or at least severely distorting the truth. Because ol’ Fatih dropped another bombshell two months ago during a television interview:
When we look at the oil markets the news is not very bright. We think that the crude oil production has already peaked in 2006.
The existing fields are declining sharply in North sea, in United States, in Gulf of Mexico. Just to stay where we are today we have to find four new Saudi Arabia’s, this is a tall order. (transcript here)
Yep. In late April, the head of the IEA said crude oil production peaked five years ago. No big deal — not newsworthy or anything. He said it on a Thursday and we killed bin Laden two days later, so the clip conveniently didn’t make it into the news cycle…
But you know it now. And you can use this truth for personal gain while the herd continues to obliviously graze.
Spreading the Word
So the IEA and the UK government are now out of the closet when it comes to Peak Oil. Anyone else want to step up and admit Peak Oil is real, and will happen sooner rather than later? I promise, the punishment will be less harsh if you confess now.
There are a few brave souls…
The UK Industry Taskforce on Peak Oil and Energy Security — composed of Yahoo!, Virgin, and others — warned in a report last year that serious oil shortages could occur by 2015.
The U.S. military has warned surplus oil capacity could disappear within two years with serious shortages by 2015.
Sweden (and Uppsala University physics professor Kjell Aleklett, in particular) still isn’t satisfied with the IEA’s partial admission of the peak. The Swedish Energy Agency funded its own Peak Oil research.
After what he found, Aleklett calls the IEA’s World Energy Outlook a “political document” meant only to aid geopolitics for oil-consuming countries with a vested interest in low prices. (He meant the United States, if you didn’t discern that bit on your own.) According to Aleklett and his team, oil output in 2030 is likely to be closer to 75 million barrels per day instead of the IEA’s more optimistic forecast of 105 mbd.
Organized societies would be reduced to chaos if that happened, which is exactly why governments have been denying it so long.
After calling the IEA’s forecast and methodology “dubious”, Aleklett added: “I am a scientist, not an economist or a politician. I believe in the facts and if someone can prove me wrong I will happily change my mind.”
The Only Thing that Can Help
The conclusion of the Peak Oil report being covered up in the UK offered this:
While alternative technologies could be pulled through by the combination of economics and government policies, the lead-times for any real impact on oil demand are long. Globally, in response to a peak, some countries may adopt short-term, partial solutions such as more coal consumption and high carbon oil production that could result in an increase in global emissions.
Coal will be burned in developing nations like India and China as a cheap way to fuel growth. And richer nations will spend increasing amounts of cash on extracting every last bit of oil and gas.
That means fracking. That means tar sands. That means deepwater.
You’re seeing this happen already.
Remember what Mr. Birol said: We need to find four new Saudi Arabias merely to remain at today’s output levels.
As the peak plays out, any remaining oil is going to be valued much higher than today’s $95.
And while I don’t know where four new Saudi Arabias are going to come from, I have seen a report that we’ll find at least one. It’s actually an extension of the same formation that gave the Saudis their copious amounts of crude, though the deposit is well outside their borders…
At over 70 billion barrels, this newly-found oil is open to any company who gets there and sets up shop.
And according to everything I read, this could be the largest deposit of easy oil left in the world.
Call it like you see it,
Editor, Energy and Capital