Comments on Greg Palast’s New Book Armed Madhouse

…There are many knowledgeable people today claiming we’ve about reached the “peak oil” stage or are close to it, and from then on the available supply will decline and eventually fail to keep up with demand. But there are others with a much different view. Greg is in the latter camp believing in his words “the Peak Oil crowd is crackers.” After some of the responses I got from my last article, I want to emphasize this is what Greg believes and these are his words, not mine. I’ll keep my views to myself so responders this time can praise or scorn Greg and leave me out of it.

Here’s Greg’s case based at least in part on the views of a former CIA oil expert now working in the Department of Energy (DOE). He names him in the book. Greg, that analyst and others believe we’re nowhere near peaking or running out of oil. He and they claim we have enough oil to last many decades into the future. Why? Because there’s oil, and then there’s oil. There’s the easy to find and refine kind called “light sweet” that’s abundant in the Middle East, and there’s also the harder to find, more expensive to refine so-called “heavy crude” and oil available from tar sands and oil shale. When these other categories are added in, the potential amount of total oil available skyrockets to off-the-chart numbers. But when those who believe these alternate sources will provide the oil of the future state their views publicly, the fireworks begin. I’ve learned there are strongly differing views on this controversial subject and both sides think the other one is “crackers.”

Here’s the case for the believers in heavy crude, tar sands and oil shale. When oil is priced at $10 a barrel, the supply is low because only the easy and cheap to extract and refine kind are economically feasible. But at $70 a barrel, it’s a whole new oil market. The heavy stuff and the rest become more economical to extract and refine, and a new far higher finite supply is realized almost magically. In short, it’s just a matter of supply and demand with the price of a commodity depending on how much of it consumers want. Too little demand and the price is low, but when it’s high like now and rising, then so does the price.

Greg also discussed the way this relates to Venezuela and how this increases that country’s available crude reserves to off-the-chart levels. I reported earlier that Venezuela may have reserves of about 350 billion barrels if all their known heavy and light crude are counted. That number is far more than is now officially recognized by OPEC which means the country has greater reserves than the Saudis by that number alone.

But there’s more, a lot more. Greg reports his DOE expert believes Venezuela holds 90% of the world’s super-heavy tar oil reserves which he estimates to be an astonishing total of 1,360,000,000,000 (1.36 trillion) barrels. So with a report like this coming from a source Greg feels is credible (I make no such claim), it’s easy to understand why Venezuela is so strategically important to the US and why it will do whatever it takes to secure control over that supply by any means including an act of aggression to seize it. The US goal isn’t access to the oil. It’s the control of the supply and its price, what companies profit from it, and overall how control of as much of this resource as possible can be used as a strategic weapon. The stakes for the US are enormous, and the battle lines are drawn in the global game of where the supply of oil is located and how an aggressive and predatory US will make every effort to control as much of it as possible even if it takes waging war to do it.

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