Friday, October 05, 2012 4:41 PM
fossil-fuel enthusiasts began trumpeting the dawn of a new “golden age of oil”
that would kick-start the American economy, generate millions of new jobs, and
free this country from its dependence on imported petroleum. Ed Morse, head
commodities analyst at Citibank, was typical. In the Wall Street Journal
he crowed, “The United States has become the fastest-growing
oil and gas producer in the world, and is likely to remain so for the rest of this
decade and into the 2020s.”
Once this surge
in U.S. energy production
was linked to a predicted boom in energy from Canada’s tar sands reserves, the
results seemed obvious and uncontestable. “North America,” he announced, “is
becoming the new Middle East.” Many other
analysts have elaborated similarly on this rosy scenario, which now provides
the foundation for Mitt Romney’s plan to achieve “energy independence” by 2020.
By employing impressive new technologies -- notably deepwater drilling and
hydraulic fracturing (or hydro-fracking) -- energy companies were said to be on
the verge of unlocking vast new stores of oil in Alaska,
the Gulf of Mexico, and shale formations across the United States. “A ‘Great Revival’
oil production is taking shape -- a major break from the near 40-year trend of
falling output,” James Burkhard of IHS Cambridge Energy Research Associates
(CERA) told the Senate Committee on Energy and Natural Resources
in January 2012.
output was also predicted elsewhere in the Western Hemisphere, especially Canada and Brazil. “The outline of a new world
oil map is emerging, and it is centered not on the Middle East but on the Western Hemisphere,” Daniel Yergin, chairman of CERA, wrote in the Washington Post. “The new energy axis
runs from Alberta, Canada,
down through North Dakota and South Texas...
to huge offshore oil deposits found near Brazil.”
It turns out,
however, that the future may prove far more recalcitrant than these prophets of
an American energy cornucopia imagine. To reach their ambitious targets, energy
firms will have to overcome severe geological and environmental barriers -- and
recent developments suggest that they are going to have a tough time doing so.
while many analysts and pundits joined in the premature celebration of the new
“golden age,” few emphasized that it would rest almost entirely on the
exploitation of “unconventional” petroleum resources -- shale oil, oil shale,
Arctic oil, deep offshore oil, and tar sands (bitumen). As for conventional oil
(petroleum substances that emerge from the ground in liquid form and can be
extracted using familiar, standardized technology), no one doubts that it will
continue its historic decline in North America.
“unconventional” oil that is to liberate the U.S. and its neighbors from the
unreliable producers of the Middle East involves substances too hard or viscous
to be extracted using standard technology or embedded in forbidding locations
that require highly specialized equipment for extraction. Think of it as “tough oil.”
Shale oil, for
instance, is oil trapped in shale rock. It can only be liberated through the
application of concentrated force in a process known as hydraulic
fracturing that requires millions of gallons of chemically laced water per
“frack,” plus the subsequent disposal of vast quantities of toxic wastewater
once the fracking has been completed. Oil
shale, or kerogen, is a primitive form of petroleum that must be melted to
be useful, a process that itself consumes vast amounts of energy. Tar
sands (or “oil sands,” as the industry prefers to call them) must be gouged
from the earth using open-pit mining technology or pumped up after first being
melted in place by underground steam jets, then treated with various chemicals.
Only then can the material be transported to refineries via, for example, the
highly controversial Keystone XL pipeline. Similarly, deepwater and Arctic
drilling requires the deployment of specialized multimillion-dollar rigs along
with enormously costly backup safety systems under the most dangerous of
All these processes have at least one thing in common: each
pushes the envelope of what is technically possible in extracting oil (or
natural gas) from geologically and geographically forbidding environments. They
are all, that is, versions of “extreme energy.” To produce them, energy companies will
have to drill in extreme temperatures or extreme weather, or use extreme
pressures, or operate under extreme danger -- or some combination of all of
these. In each, accidents, mishaps, and setbacks are guaranteed to be more
frequent and their consequences more serious than in conventional drilling
operations. The apocalyptic poster child for these processes already played out
in 2010 with BP’s Deepwater Horizon disaster in the Gulf
of Mexico, and this summer we saw intimations of how it will
happen again as a range of major unconventional drilling initiatives -- all
promising that “golden age” -- ran into serious trouble.
most notable example of this was Shell Oil’s costly failure to commence test
drilling in the Alaskan Arctic. After investing $4.5 billion and years of preparation, Shell was
poised to drill five test wells this summer in the Beaufort and Chukchi Seas
northern and northwestern coasts. However, on September 17th, a series of
accidents and mishaps forced the company to announce that it would suspend operations until next summer
-- the only time when those waters are largely free of pack ice and so it is
safer to drill.
problems began early and picked up pace as the summer wore on. On September
10th, its Noble Discoverer drill ship was forced to abandon operations at the Burger Prospect, about 70 miles
offshore in the Chukchi
Sea, when floating sea
ice threatened the safety of the ship. A more serious setback occurred later in
the month when a containment dome designed to cover any leak that developed at
an undersea well malfunctioned during tests in Puget Sound in Washington State.
As Clifford Krauss noted in the New York Times, “Shell’s inability to
control its containment equipment in calm waters under predictable test
conditions suggested that the company would not be able to effectively stop a
sudden leak in treacherous Arctic waters, where powerful ice floes and gusty
winds would complicate any spill response.”
was also impeded by persistent opposition from environmentalists and native
groups. They have repeatedly brought suit to block its operations on the
grounds that Arctic drilling will threaten the survival of marine life
essential to native livelihoods and culture. Only after promising to take
immensely costly protective measures and winning the support of the Obama administration -- fearful of appearing
to block “job creation” or “energy independence” during a presidential campaign
-- did the company obtain the necessary permits to proceed. But some lawsuits
remain in play and, with this latest delay, Shell’s opponents will have added
time and ammunition.
Shell insist that the company will overcome all these hurdles and be ready to
drill next summer. But many observers view its experience as a deterrent to
future drilling in the Arctic. “As long as
Shell has not been able to show that they can get the permits and start to
drill, we’re a bit skeptical about moving forward,” said Tim Dodson of Norway’s Statoil. That company also
owns licenses for drilling in the Chukchi
Sea, but has now decided
to postpone operations until 2015 at the earliest.
unexpected impediment to the arrival of energy’s next “golden age” in North
America emerged even more unexpectedly from this summer’s record-breaking
drought, which still has 80 percent of U.S. agricultural land in its grip. The energy angle
on all this was, however, a surprise.
Any increase in
hydrocarbon output will require greater extraction of oil and gas from shale
rock, which can only be accomplished via hydro-fracking. More fracking, in
turn, means more water consumption. With the planet warming thanks to climate
change, such intensive droughts are expected to intensify in many regions, which means rising agricultural
demand for less water, including potentially in prime fracking locations like
the Bakken formation of North Dakota, the
Eagle Ford area of West Texas, and the Marcellus formation in Pennsylvania.
impact on hydro-fracking became strikingly evident when, in June and July,
wells and streams started drying up in many drought-stricken areas and drillers
suddenly found themselves competing with hard-pressed food-producers for whatever
water was available. “The amount of water needed for drilling is a double
whammy,” Chris Faulkner, the president and chief executive officer of Breitling Oil &
Gas, told Oil & Gas Journal in July. “We’re getting pushback
from farmers, and my fear is that it’s going to get worse.” In July, in fact,
the situation became so dire in Pennsylvania
that the Susquehanna River Basin Commission suspended permits for water withdrawals from the Susquehanna River and its tributaries, forcing some
drillers to suspend operations.
If this year’s
“endless summer” of unrelenting drought were just a fluke,
and we could expect abundant water in the future, the golden age scenario might
still be viable. But most climate scientists suggest that severe drought is
likely to become the “new normal” in many parts of the United States, putting the fracking
boom very much into question. “Bakken and Eagle Ford are our big keys to energy
independence,” Faulkner noted. “Without water, drilling shale gas and oil wells
is not possible. A continuing drought could cause our domestic production to
decline and derail our road to energy independence in a hurry.”
And then there
are those Canadian tar sands. Turning them into “oil” also requires vast amounts
of water, and climate-change-related shortages of that vital commodity are also
likely in Alberta, Canada, their heartland. In
addition, tar sands production releases far more greenhouse gas emissions than
conventional oil production, which has sparked its own fiercely determined
opposition in Canada, the United States, and Europe.
In the U.S.,
opposition to tar sands has until now largely focused on the construction of
XL pipeline, a $7 billion, 2,000-mile conduit that would carry diluted tar
sands oil from Hardisty, Alberta, to refineries on the U.S. Gulf Coast,
thousands of miles away. Parts of the Keystone system are already in place. If
completed, the pipeline is designed to carry 1.1 million barrels a day of
unrefined liquid across the United
opponents charge that the project will contribute to the acceleration
of climate change. It also exposes crucial underground water supplies in the Midwest to severe risk of contamination by the highly
corrosive tar-sands fluid (and pipeline leaks are commonplace). Citing the
closeness of its proposed route to the critical Ogallala
Aquifer, President Obama denied permission for its construction last January.
(Because it will cross an international boundary, the president gets to make
the call.) He is, however, expected to grant post-election approval to a new,
less aquifer-threatening route; Mitt Romney has vowed to give it his approval
on his first day in office.
Keystone XL were in place, the golden age of Canada’s tar sands won’t be in
sight -- not without yet more pipelines as the bitumen producers face mounting
opposition to their extreme operations. As a result of fierce resistance to
Keystone XL, led in large part by Bill McKibben, -- the public has become far more aware of
the perils of tar sands production. Resistance to it, for example, could stymie
plans to deliver tar sands oil to Portland, Maine (for transshipment by ship to refineries
elsewhere), via an existing pipeline that runs from Montreal
through Vermont and New
Hampshire to the Maine
coast. Environmentalists in New England are
already gearing up to oppose the plan.
If the U.S. proves too tough a nut to crack, Alberta has a backup plan: construction of the Northern
Gateway, a proposed pipeline through British Columbia
for the export of tar sands oil to Asia.
However, it, too, is running into trouble. Environmentalists and native
communities in that province are implacably opposed and have threatened civil disobedience to prevent its construction (with major
protests already set for October 22nd outside the Parliament
Building in Victoria).
sands oil across the Atlantic is likely to
have its own set of problems. The European Union is considering adopting rules that would label it a dirtier
form of energy, subjecting it to various penalties when imported into the European
Union. All of this is, in turn, has forced Albertan authorities to consider tough new environmental regulations that would make it more
difficult and costly to extract bitumen, potentially dampening the enthusiasm
of investors and so diminishing the future output of tar sands.
In a sense,
while the dreams of the boosters of these new forms of energy may thrill
journalists and pundits, their reality could be expressed this way: extreme
energy = extreme methods = extreme disasters = extreme opposition.
already many indications that the new “golden age” of North American oil is
unlikely to materialize as publicized, including an unusually rapid decline in oil output at existing shale oil drilling
operations in Montana.
is not a major producer, the decline there is significant because it is
occurring in part of the Bakken field, widely considered a major source of new
oil.) As for the rest of the Western Hemisphere,
there is little room for optimism there either when it comes to the “promise”
of extreme energy. Typically, for instance, a Brazilian court has ordered Chevron to cease production at its multibillion-dollar
Frade field in the Campos basin of Brazil’s
deep and dangerous Atlantic waters because of
repeated oil leaks. Doubts have meanwhile arisen over the ability of Petrobras, Brazil’s
state-controlled oil company, to develop the immensely challenging Atlantic
“pre-salt” fields on its own.
from unconventional oil operations in the U.S.
is likely to show some growth in the years ahead, there is no “golden age” on
the horizon, only various kinds of potentially disastrous scenarios. Those like
Mitt Romney who claim that the United
States can achieve energy “independence” by
2020 or any other near-term date are only fooling themselves, and perhaps some
elements of the American public. They may indeed employ such claims to gain
support for the rollback of what environmental protections exist against the
exploitation of extreme energy, but the United States will remain dependent
on Middle Eastern and African oil for the foreseeable future.
Of course, were
such a publicized golden age to come about, we would be burning vast quantities
of the dirtiest energy on the planet with truly disastrous consequences. The
truth is this: there is just one possible golden age for U.S. (or any other
kind of) energy and it would be based on a major push to produce breakthroughs
in climate-friendly renewables, especially wind, solar, geothermal, wave, and
only “golden” sight around is likely to be the sun on an ever hotter, ever
dirtier, ever more extreme planet.
Klare is a professor of peace and world security studies at Hampshire College,
, and the author, most
The Race for What’s Left
. A movie based on one of his
earlier books, Blood and Oil, can be ordered at http://www.bloodandoilmovie.com.
Klare’s other books and articles are described at his website.
You can follow Klare’s work on Facebook.
Michael T. Klare
Image by Ray Bodden,
licensed under Creative
Monday, April 02, 2012 2:10 PM
This post originally appeared on Tom Dispatch.
The “curse” of
oil wealth is a well-known phenomenon in Third World
petro-states where millions of lives are wasted in poverty and the environment
is ravaged, while tiny elites rake in the energy dollars and corruption rules
the land. Recently, North America has been repeatedly hailed as the planet’s twenty-first-century “new
Saudi Arabia” for “tough energy” -- deep-sea oil, Canadian tar sands,
and fracked oil and natural gas. But here’s a question no one considers: Will
the oil curse become as familiar on this continent in the wake of a new
American energy rush as it is in Africa and
elsewhere? Will North America, that is, become not just the next boom continent
for energy bonanzas, but a new energy Third World?
Once upon a
time, the giant U.S. oil
companies -- Chevron, Exxon, Mobil, and Texaco -- got their start in North
America, launching an oil boom that lasted a century and made the U.S. the
planet’s dominant energy producer. But most of those companies have long since
turned elsewhere for new sources of oil.
Eager to escape ever-stronger environmental restrictions and dying oil
fields at home, the energy giants were naturally drawn to the economically and
environmentally wide-open producing areas of the Middle East, Africa, and Latin
America -- the Third World -- where oil deposits were plentiful, governments
compliant, and environmental regulations few or nonexistent.
Here, then, is
the energy surprise of the twenty-first century: with operating conditions
growing increasingly difficult in the global South, the major firms are now
flocking back to North America. To exploit
previously neglected reserves on this continent, however, Big Oil will have to
overcome a host of regulatory and environmental obstacles. It will, in other
words, have to use its version of deep-pocket persuasion to convert the United States into the functional equivalent of
a Third World petro-state.
observers are already noting the first telltale signs of the oil industry’s
“Third-Worldification” of the United
States. Wilderness areas from which the oil
companies were once barred are being opened to energy exploitation and other
restraints on invasive drilling operations are being dismantled. Expectations
are that, in the wake of the 2012 election season, environmental regulations
will be rolled back even further and other protected areas made available for
development. In the process, as has so often been the case with Third World petro-states, the rights and wellbeing of
local citizens will be trampled underfoot.
to the Third World of Energy
Up until 1950,
the United States was the
world’s leading oil producer, the Saudi Arabia of its day. In that
year, the U.S.
produced approximately 270 million metric tons of oil, or about 55% of the
world’s entire output. But with a postwar recovery then in full swing, the
world needed a lot more energy while America’s most accessible oil
fields -- though still capable of growth -- were approaching their maximum
sustainable production levels. Net U.S. crude oil output reached a peak of about 9.2 million barrels per day in 1970 and then
went into decline (until very recently).
the giant oil firms, which had already developed significant footholds in Indonesia, Iran,
Saudi Arabia, and Venezuela, to
scour the global South in search of new reserves to exploit -- a saga told with
great gusto in Daniel Yergin’s epic history of the oil industry, The Prize. Particular attention was
devoted to the Persian Gulf region, where in 1948 a consortium of American
companies -- Chevron, Exxon, Mobil, and Texaco -- discovered the world’s
largest oil field, Ghawar, in Saudi
Arabia. By 1975, Third World countries were producing 58% of the world’s oil supply, while the U.S. share had
dropped to 18%.
concerns also drove this search for new reserves in the global South. On
January 28, 1969, a blowout
at Platform A of a Union Oil Company offshore field in California’s Santa Barbara Channel produced
a massive oil leak that covered much of the area and laid waste to local
wildlife. Coming at a time of growing environmental consciousness, the spill
provoked an outpouring of public outrage, helping to inspire the establishment
of Earth Day, first observed one year later. Equally important, it helped spur
passage of various legislative restraints on drilling activities, including the
National Environmental Policy Act of 1970, the Clean Water
Act of 1972, and the Safe
Drinking Water Act of 1974. In addition, Congress banned new drilling in
waters off the Atlantic and Pacific coasts and in the eastern Gulf of Mexico
also expanded areas designated as wilderness or wildlife preserves, protecting
them from resource extraction. In 1952, for example, President Eisenhower
established the Arctic
National Wildlife Range and, in 1980, this remote area of northeastern Alaska was redesignated
by Congress as the Arctic
National Wildlife Refuge (ANWR). Ever since the discovery of oil in the
adjacent Prudhoe Bay area, energy firms have
been clamoring for the right to drill in ANWR, only to be blocked by one or
another president or house of Congress.
For the most
part, production in Third World countries
posed no such complications. The Nigerian government, for example, has long
welcomed foreign investment in its onshore and offshore oil fields, while
showing little concern over the despoliation of its southern coastline, where
oil company operations have produced a massive environmental disaster. As Adam
Nossiter of the New York Timesdescribed the resulting situation, “The Niger Delta, where
the [petroleum] wealth underground is out of all proportion with the poverty on
the surface, has endured the equivalent of the Exxon Valdez spill every year
for 50 years by some estimates.”
As vividly laid
out by Peter Maass in Crude World, a similar pattern is evident in many
other Third World petro-states where anything goes as compliant government
officials -- often the recipients of hefty bribes or other oil-company favors
-- regularly look the other way. The companies, in turn, don’t trouble
themselves over the human rights abuses perpetrated by their foreign government
“partners” -- many of them dictators, warlords, or feudal potentates.
But times change. The Third World
increasingly isn’t what it used to be. Many countries in the global South are
becoming more protective of their environments, ever more inclined to take ever
larger cuts of the oil wealth of their own countries, and ever more inclined to
punish foreign companies that abuse their laws. In February 2011, for example,
a judge in the Ecuadorean Amazon town of Lago
Agrio ordered Chevron to pay $9 billion in damages for
environmental harm caused to the region in the 1970s by Texaco (which the
company later acquired). Although the Ecuadorians are unlikely to collect a
single dollar from Chevron, the case is indicative of the tougher regulatory
climate now facing these companies in the developing world. More recently, in a
case resulting from an oil spill at an offshore field, a judge in Brazil has seized the passports of 17 employees of Chevron and U.S.
drilling-rig operator Transocean, preventing them from leaving the country.
production is on the decline in some developing countries like Indonesia and Gabon, while others have
nationalized their oil fields or narrowed the space in which private
international firms can operate. During Hugo Chávez’s presidency, for example,
Venezuela has forced all foreign firms to award a majority stake in their
operations to the state oil company, Petróleos de Venezuela S.A. Similarly, the Brazilian
government, under former President Luiz Inácio Lula da Silva, instituted a rule
that all drilling operations in the new “pre-salt” fields in the Atlantic Ocean
-- widely believed to be the biggest oil discovery of the twenty-first century
-- be managed by the state-controlled firm, Petróleo de Brasil
Our Way to a Toxic Planet
in the Third World have forced the major U.S. and European firms -- BP,
Chevron, ConocoPhillips, ExxonMobil, Royal Dutch Shell, and Total of France --
to look elsewhere for new sources of oil and natural gas. Unfortunately for
them, there aren’t many places left in the world that possess promising
hydrocarbon reserves and also welcome investment by private energy giants.
That’s why some of the most attractive new energy markets now lie in Canada and the United States, or in the waters off
their shores. As a result, both are experiencing a remarkable uptick in fresh
investment from the major international firms.
still possess substantial oil and gas deposits, but not of the “easy” variety
(deposits close to the surface, close to shore, or easily accessible for
extraction). All that remains are “tough” energy reserves (deep underground,
far offshore, hard to extract and process). To exploit these, the energy
companies must deploy aggressive technologies likely to cause extensive damage
to the environment and in many cases human health as well. They must also find
ways to gain government approval to enter environmentally protected areas now
The formula for
making Canada and the U.S. the “Saudi Arabia” of the twenty-first
century is grim but relatively simple: environmental protections will have to
be eviscerated and those who stand in the way of intensified drilling, from
landowners to local environmental protection groups, bulldozed out of the way.
Put another way, North America will have to be
extraction of shale oil and gas, widely considered the most crucial aspect of
Big Oil’s current push back into the North American market. Shale formations in
Canada and the U.S. are
believed to house massive quantities of oil and natural gas, and their accelerated
extraction is already helping reduce the region’s reliance on imported
sources, however, can only be extracted through a process known as hydraulic
fracturing (“hydro-fracking,” or just plain “fracking”) that uses powerful jets
of water in massive quantities to shatter underground shale formations,
creating fissures through which the hydrocarbons can escape. In addition, to
widen these fissures and ease the escape of the oil and gas they hold, the
fracking water has to be mixed with a variety of often poisonous solvents and
acids. This technique produces massive quantities of toxic
wastewater, which can neither be returned to the environment without
endangering drinking water supplies nor easily stored and decontaminated.
expansion of hydro-fracking would be problematic under the best of
circumstances, which these aren’t. Many of the richest sources of shale oil and
gas, for instance, are located in populated areas of Texas,
Pennsylvania, and New York. In fact, one of the most promising
sites, the Marcellus formation, abuts New York
City’s upstate watershed area. Under such
circumstances, concern over the safety of drinking water should be paramount,
and federal legislation, especially the Safe Drinking Water Act of 1974, should
theoretically give the Environmental Protection Agency (EPA) the power to
oversee (and potentially ban) any procedures that endanger water supplies.
companies seeking to increase profits by maximizing the utilization of
hydro-fracking banded together, put pressure on Congress, and managed to get
itself exempted from the 1974 law’s provisions. In 2005, under heavy lobbying
from then Vice President Dick Cheney -- formerly the CEO of oil services
contractor Halliburton -- Congress passed the Energy Policy Act, which prohibited the EPA from
regulating hydro-fracking via the Safe Drinking Water Act, thereby eliminating
a significant impediment to wider use of the technique.
there has been a virtual stampede to the shale regions by the major oil
companies, which have in many cases devoured smaller firms that pioneered the
development of hydro-fracking. (In 2009, for example, ExxonMobil paid $31 billion to acquire XTO Energy, one of the leading
producers of shale gas.) As the extraction of shale oil and gas has
accelerated, the industry has faced other problems. To successfully exploit
promising shale formations, for instance, energy firms must insert many wells,
since each fracking operation can only extend several hundred feet in any
direction, requiring the establishment of noisy, polluting, and potentially hazardous drilling
operations in well-populated rural and suburban areas.
has been welcomed by some of these communities as a source of added income,
many have vigorously opposed the invasion, seeing it as an assault on
neighborhood peace, health, and safety. In an effort to protect their quality
of life, some Pennsylvania communities, for example, have adopted zoning laws
that ban fracking in their midst. Viewing this as yet another intolerable
obstacle, the industry has put intense pressure on friendly members of the state legislature to
adopt a law depriving most local jurisdictions of the right to exclude fracking
operations. “We have been sold out to the gas industry, plain and simple,” said Todd Miller, a town commissioner in South Fayette
Township who opposed the
If the energy
industry has its way in North America, there
will be many more Todd Millers complaining about the way their lives and worlds
have been “sold out” to the energy barons. Similar battles are already being fought elsewhere in North America, as energy firms seek to overcome
resistance to expanded drilling in areas once protected from such activity.
In Alaska, for example, the
industry is fighting in the courts and in Congress to allow drilling in coastal
areas, despite opposition from Native American communities which
worry that vulnerable marine animals and their traditional way of life will be
put at risk. This summer, Royal Dutch Shell is expected to begin test drilling in the Chukchi Sea,
an area important to several such communities.
And this is
just the beginning. To gain access to additional stores of oil and gas, the
industry is seeking to eliminate virtually all environmental restraints imposed
since the 1960s and open vast tracts of coastal and wilderness areas, including
ANWR, to intensive drilling. It also seeks the construction of the much disputed Keystone XL pipeline, which is to transport
synthetic crude oil made from Canadian tar sands -- a particularly “dirty” and
environmentally devastating form of energy which has attracted substantial U.S. investment -- to Texas
for further processing. According to Jack Gerard, president of the American
Petroleum Institute (API), the preferred U.S. energy strategy “would include
greater access to areas that are currently off limits, a regulatory and
permitting process that supported reasonable timelines for development, and
immediate approval of the Keystone XL pipeline.”
these objectives, the API, which claims to represent more than 490 oil and
natural gas companies, has launched a multimillion-dollar campaign to sway the 2012 elections,
dubbed “Vote 4 Energy.” While describing itself as nonpartisan, the
API-financed campaign seeks to discredit and marginalize any candidate,
including President Obama, who opposes even the mildest version of its
two paths that we can take” on energy policy, the Vote 4 Energy Web site
proclaims. “One path leads to more jobs, higher government revenues and greater
energy security -- which can be achieved by increasing oil and natural gas
development right here at home. The other path would put jobs, revenues and our
energy security at risk.” This message will be broadcast with increasing
frequency as Election Day nears.
the energy industry, we are at a fork in the road and can either choose a path
leading to greater energy independence or to ever more perilous energy
insecurity. But there is another way to characterize that “choice”: on one
path, the United States will increasingly come to resemble a Third World
petro-state, with compliant government leaders, an increasingly money-ridden
and corrupt political system, and negligible environmental and health
safeguards; on the other, which would also involve far greater investment in
the development of renewable alternative energies, it would remain a First
World nation with strong health and environmental regulations and robust
characterize our energy predicament in the coming decades and what path we
ultimately select will in large measure determine the fate of this nation.
Klare is a professor of peace and world security studies at Hampshire College,
, and the author of
The Race for What’s Left: The Global Scramble for the World’s
just published by Metropolitan Books. To listen to
Timothy MacBain’s Tomcast audio interview in which Klare discusses his new book
and what it means to rely on extreme energy, click
, or download it to your iPod
. Klare can be followed on Facebook.
TomDispatch on Twitter @TomDispatch and join us on Facebook.
Michael T. Klare
Image by Robert Croft, licensed under Creative Commons.
Thursday, June 09, 2011 10:22 AM
This article was originally published at
Here’s the good news about energy: thanks to rising oil prices and deteriorating economic conditions worldwide, the International Energy Agency (IEA) reports that global oil demand will not grow this year as much as once assumed, which may provide some temporary price relief at the gas pump. In its May Oil Market Report, the IEA reduced its 2011 estimate for global oil consumption by 190,000 barrels per day, pegging it at 89.2 million barrels daily. As a result, retail prices may not reach the stratospheric levels predicted earlier this year, though they will undoubtedly remain higher than at any time since the peak months of 2008, just before the global economic meltdown. Keep in mind that this is the good news.
As for the bad news: the world faces an array of intractable energy problems that, if anything, have only worsened in recent weeks. These problems are multiplying on either side of energy’s key geological divide: below ground, once-abundant reserves of easy-to-get “conventional” oil, natural gas, and coal are drying up; above ground, human miscalculation and geopolitics are limiting the production and availability of specific energy supplies. With troubles mounting in both arenas, our energy prospects are only growing dimmer.
Here’s one simple fact without which our deepening energy crisis makes no sense: the world economy is structured in such a way that standing still in energy production is not an option. In order to satisfy the staggering needs of older industrial powers like the United States along with the voracious thirst of rising powers like China, global energy must grow substantially every year. According to the projections of the U.S. Department of Energy (DoE), world energy output, based on 2007 levels, must rise 29% to 640 quadrillion British thermal units by 2025 to meet anticipated demand. Even if usage grows somewhat more slowly than projected, any failure to satisfy the world’s requirements produces a perception of scarcity, which also means rising fuel prices. These are precisely the conditions we see today and should expect for the indefinite future.
It is against this backdrop that three crucial developments of 2011 are changing the way we are likely to live on this planet for the foreseeable future.
Tough-Oil RebelsThe first and still most momentous of the year’s energy shocks was the series of events precipitated by the Tunisian and Egyptian rebellions and the ensuing “Arab Spring” in the greater Middle East. Neither Tunisia nor Egypt was, in fact, a major oil producer, but the political shockwaves these insurrections unleashed has spread to other countries in the region that are, including Libya, Oman, and Saudi Arabia. At this point, the Saudi and Omani leaderships appear to be keeping a tight lid on protests, but Libyan production, normally averaging approximately 1.7 million barrels per day, has fallen to near zero.
When it comes to the future availability of oil, it is impossible to overstate the importance of this spring’s events in the Middle East, which continue to thoroughly rattle the energy markets. According to all projections of global petroleum output, Saudi Arabia and the other Persian Gulf states are slated to supply an ever-increasing share of the world’s total oil supply as production in key regions elsewhere declines. Achieving this production increase is essential, but it will not happen unless the rulers of those countries invest colossal sums in the development of new petroleum reserves—especially the heavy, “tough oil” variety that requires far more costly infrastructure than existing “easy oil” deposits.
In a front-page story entitled “Facing Up to the End of ‘Easy Oil,’” the Wall Street Journal noted that any hope of meeting future world oil requirements rests on a Saudi willingness to sink hundreds of billions of dollars into their remaining heavy-oil deposits. But right now, faced with a ballooning population and the prospects of an Egyptian-style youth revolt, the Saudi leadership seems intent on using its staggering wealth on employment-generating public-works programs and vast arrays of weaponry, not new tough-oil facilities; the same is largely true of the other monarchical oil states of the Persian Gulf.
Whether such efforts will prove effective is unknown. If a youthful Saudi population faced with promises of jobs and money, as well as the fierce repression of dissidence, has seemed less confrontational than their Tunisian, Egyptian, and Syrian counterparts, that doesn’t mean that the status quo will remain forever. “Saudi Arabia is a time bomb,” commented Jaafar Al Taie, managing director of Manaar Energy Consulting (which advises foreign oil firms operating in the region). “I don’t think that what the King is doing now is sufficient to prevent an uprising,” he added, even though the Saudi royals had just announced a $36-billion plan to raise the minimum wage, increase unemployment benefits, and build affordable housing.
At present, the world can accommodate a prolonged loss of Libyan oil. Saudi Arabia and a few other producers possess sufficient excess capacity to make up the difference. Should Saudi Arabia ever explode, however, all bets are off. “If something happens in Saudi Arabia, [oil] will go to $200 to $300 [per barrel],” said Sheikh Zaki Yamani, the kingdom’s former oil minister, on April 5th. “I don’t expect this for the time being, but who would have expected Tunisia?”
Nuclear Power on the Downward SlopeIn terms of the energy markets, the second major development of 2011 occurred on March 11th when an unexpectedly powerful earthquake and tsunami struck Japan. As a start, nature’s two-fisted attack damaged or destroyed a significant proportion of northern Japan’s energy infrastructure, including refineries, port facilities, pipelines, power plants, and transmission lines. In addition, of course, it devastated four nuclear plants at Fukushima, resulting, according to the U.S. Department of Energy, in the permanent loss of 6,800 megawatts of electric generating capacity.
This, in turn, has forced Japan to increase its imports of oil, coal, and natural gas, adding to the pressure on global supplies. With Fukushima and other nuclear plants off line, industry analysts calculate that Japanese oil imports could rise by as much as 238,000 barrels per day, and imports of natural gas by 1.2 billion cubic feet per day (mostly in the form of liquefied natural gas, or LNG).
This is one major short-term effect of the tsunami. What about the longer-term effects? The Japanese government now claims it is scrapping plans to build as many as 14 new nuclear reactors over the next two decades. On May 10th, Prime Minister Naoto Kan announced that the government would have to “start from scratch” in devising a new energy policy for the country. Though he speaks of replacing the cancelled reactors with renewable energy systems like wind and solar, the sad reality is that a significant part of any future energy expansion will inevitably come from more imported oil, coal, and LNG.
The disaster at Fukushima—and ensuing revelations of design flaws and maintenance failures at the plant—has had a domino effect, causing energy officials in other countries to cancel plans to build new nuclear plants or extend the life of existing ones. The first to do so was Germany: on March 14th, Chancellor Angela Merkel closed two older plants and suspended plans to extend the life of 15 others. On May 30th, her government made the suspension permanent. In the wake of mass antinuclear rallies and an election setback, she promised to shut all existing nuclear plants by 2022, which, experts believe, will result in an increase in fossil-fuel use.
China also acted swiftly, announcing on March 16th that it would stop awarding permits for the construction of new reactors pending a review of safety procedures, though it did not rule out such investments altogether. Other countries, including India and the United States, similarly undertook reviews of reactor safety procedures, putting ambitious nuclear plans at risk. Then, on May 25th, the Swiss government announced that it would abandon plans to build three new nuclear power plants, phase out nuclear power, and close the last of its plants by 2034, joining the list of countries that appear to have abandoned nuclear power for good.
How Drought Strangles EnergyThe third major energy development of 2011, less obviously energy-connected than the other two, has been a series of persistent, often record, droughts gripping many areas of the planet. Typically, the most immediate and dramatic effect of prolonged drought is a reduction in grain production, leading to ever-higher food prices and ever more social turmoil.
Intense drought over the past year in Australia, China, Russia, and parts of the Middle East, South America, the United States, and most recently northern Europe has contributed to the current record-breaking price of food—and this, in turn, has been a key factor in the political unrest now sweeping North Africa, East Africa, and the Middle East. But drought has an energy effect as well. It can reduce the flow of major river systems, leading to a decline in the output of hydroelectric power plants, as is now happening in several drought-stricken regions.
By far the greatest threat to electricity generation exists in China, which is suffering from one of its worst droughts ever. Rainfall levels from January to April in the drainage basin of the Yangtze, China’s longest and most economically important river, have been 40% lower than the average of the past 50 years, according to China Daily. This has resulted in a significant decline in hydropower and severe electricity shortages throughout much of central China.
The Chinese are burning more coal to generate electricity, but domestic mines no longer satisfy the country’s needs and so China has become a major coal importer. Rising demand combined with inadequate supply has led to a spike in coal prices, and with no comparable spurt in electricity rates (set by the government), many Chinese utilities are rationing power rather than buy more expensive coal and operate at a loss. In response, industries are upping their reliance on diesel-powered backup generators, which in turn increases China’s demand for imported oil, putting yet more pressure on global fuel prices.
Wrecking the PlanetSo now we enter June with continuing unrest in the Middle East, a grim outlook for nuclear power, and a severe electricity shortage in China (and possibly elsewhere). What else do we see on the global energy horizon?
Despite the IEA’s forecast of diminished future oil consumption, global energy demand continues to outpace increases in supply. From all indications, this imbalance will persist.
Take oil. A growing number of energy analysts now agree that the era of “easy oil” has ended and that the world must increasingly rely on hard-to-get “tough oil.” It is widely assumed, moreover, that the planet harbors a lot of this stuff—deep underground, far offshore, in problematic geological formations like Canada’s tar sands, and in the melting Arctic. However, extracting and processing tough oil will prove ever more costly and involve great human, and even greater environmental, risk. Think: BP’s Deepwater Horizon disaster of April 2010 in the Gulf of Mexico.
Such is the world’s thirst for oil that a growing amount of this stuff will nonetheless be extracted, even if not, in all likelihood, at a pace and on a scale necessary to replace the disappearance of yesterday’s and today’s easy oil. Along with continued instability in the Middle East, this tough-oil landscape seems to underlie expectations that the price of oil will only rise in the coming years. In a poll of global energy company executives conducted this April by the KPMG Global Energy Institute, 64% of those surveyed predicted that crude oil prices will cross the $120 per barrel barrier before the end of 2011. Approximately one-third of them predicted that the price would go even higher, with 17% believing it would reach $131-$140 per barrel; 9%, $141-$150 per barrel; and 6%, above the $150 mark.
The price of coal, too, has soared in recent months, thanks to mounting worldwide demand as supplies of energy from nuclear power and hydroelectricity have contracted. Many countries have launched significant efforts to spur the development of renewable energy, but these are not advancing fast enough or on a large enough scale to replace older technologies quickly. The only bright spot, experts say, is the growing extraction of natural gas from shale rock in the United States through the use of hydraulic fracturing (“hydro-fracking”).
Proponents of shale gas claim it can provide a large share of America’s energy needs in the years ahead, while actually reducing harm to the environment when compared to coal and oil (as gas emits less carbon dioxide per unit of energy released); however, an expanding chorus of opponents are warning of the threat to municipal water supplies posed by the use of toxic chemicals in the fracking process. These warnings have proven convincing enough to lead lawmakers in a growing number of statesto begin placing restrictions on the practice, throwing into doubt the future contribution of shale gas to the nation’s energy supply. Also, on May 12th, the French National Assembly (the powerful lower house of parliament) voted 287 to 146 to ban hydro-fracking in France, becoming the first nation to do so.
The environmental problems of shale gas are hardly unique. The fact is that all of the strategies now being considered to extend the life-spans of oil, coal, and natural gas involve severe economic and environmental risks and costs—as, of course, does the very use of fossil fuels of any sort at a moment when the first IEA numbers for 2010 indicate that it was an unexpectedly record-breaking year for humanity when it came to dumping greenhouse gases into the atmosphere.
With the easily accessible mammoth oil fields of Texas, Venezuela, and the Middle East either used up or soon to be significantly depleted, the future of oil rests on third-rate stuff like tar sands, shale oil, and extra-heavy crude that require a lot of energy to extract, processes that emit added greenhouse gases, and as with those tar sands, tend to play havoc with the environment.
Shale gas is typical. Though plentiful, it can only be pried loose from underground shale formations through the use of explosives and highly pressurized water mixed with toxic chemicals. In addition, to obtain the necessary quantities of shale oil, many tens of thousands of wells will have to be sunk across the American landscape, any of one of which could prove to be an environmental disaster.
Likewise, the future of coal will rest on increasingly invasive and hazardous techniques, such as the explosive removal of mountaintops and the dispersal of excess rock and toxic wastes in the valleys below. Any increase in the use of coal will also enhance climate change, since coal emits more carbon dioxide than do oil and natural gas.
Here’s the bottom line: Any expectations that ever-increasing supplies of energy will meet demand in the coming years are destined to be disappointed. Instead, recurring shortages, rising prices, and mounting discontent are likely to be the thematic drumbeat of the globe’s energy future.
If we don’t abandon a belief that unrestricted growth is our inalienable birthright and embrace the genuine promise of renewable energy (with the necessary effort and investment that would make such a commitment meaningful), the future is likely to prove grim indeed. Then, the history of energy, as taught in some late twenty-first-century university, will be labeled: How to Wreck the Planet 101.
Image by spaceamoeba, licensed under Creative Commons.
Saturday, June 07, 2008 4:10 PM
It’s easy to look at the disaster in Iraq, hang your head, and curse Dick Cheney’s soul. Indeed sometimes, especially at lefty fests like this weekend’s National Conference for Media Reform, it seems like all our troubles can be traced back to Dick and his underling George. Blood and Oil, a documentary based on Michael T. Klare’s 2004 book of the same name, makes a strong case for looking beyond Bush & Co. to the roots of the United States’ geopolitical oil mongering. Along the way, it takes aim at some sacred idols of the left, namely Franklin Delano Roosevelt and Jimmy Carter.
In 1945, as Roosevelt saw the United States’ self-sufficiency in oil production slipping away, he set out to meet with Saudi Arabia’s king, striking a deal that has survived all administrations since: U.S. protection of the Saudi royal family for proprietary oil development rights. From there, Klare, the defense correspondent for the Nation, traces the evolution of U.S. oil policy through various presidents, reserving a special place for Jimmy Carter, who he says laid the foundation for the doctrine sanctioning the use of military force to protect America’s strategic oil interests in the Middle East. Reagan beefed up that doctrine, and, producer Scott Morris noted in a question-and-answer session after the film, Cheney “blew the policy out of the water.” But it didn’t come out of nowhere, and that’s a valuable lesson as we prepare to write the obituary of the Bush administration and look toward the policies of the next president.
For more on the National Conference for Media Reform, click here.
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