Peak Oil Passnotes: What Price Energy Security?

If the quest for energy stability is one that the world’s major economies want to pursue, then things are not going well. If you take a second to stand back and look at the countries that produce large quantities of energy then it seems obvious that we are destined to have some major problems. That is if you like cheap energy. If you like high prices then things look good.
The attempt by right wing fundamentalists in the U.S. and the U.K. to secure energy supply through bombs, tanks and the blood of hundreds of thousands is failing. And failing fast. Just like the state-capitalists of the Soviet Union failed in their own attempt in Afghanistan. Iraq may no longer pose a threat to U.S. power-interests, in as much as it will not be invading any of its neighbours any time soon, but the anticipated stream of cheap energy has distinctly failed to materialise.

Perhaps the only Saddamite law left on the statute books by the U.S. was the one that forbade negotiations with trade unions. But now it appears that even this is disintegrating. Unions have formed in Iraq, the Iraqi Oil Workers Federation is the umbrella organisation, and this week the government said it would arrest its leaders after strikes were threatened. Now that’s democracy.

Instead the government has been forced into negotiations, in part due to the endless wrangling over the dubious oil law. That is if “death squads” do not kill the union leaders first. An interesting parallel with anther staunch U.S. ally such as Colombia, the only country where Thanksgiving turkeys have a better chance of annual survival than a union representative. But still, the road to the wonderful idea of a 5 million barrel a day Iraq is a long way off.

Of course in terms of instability of energy security Nigeria is right up there. There are very few good guys in the Niger Delta. Certainly very few with guns. Perhaps the only honest ones are the fighters from the little villages yearning for some kind of decent living standards – at least they mean what they say.

Because when you get to the more organised groups like the Movement for the Emancipation of the Niger Delta (Mend) there is little doubt many of their fighters are for hire. They flit between oil theft, ideological kidnap and “security” work. The collapse of Nigeria is only a question of when.

We could also take a look at what is going on in Russia, producing 9 million barrels a day of crude and locking Europe into gas dependency. Russia was destroyed by the fall of its previous empire under the Soviet system. The western economic system provided no breaks, instead it led to ‘gangsterism’ and now, as the country climbs back on its feet, it has not forgotten what happened.

International oil companies have to keep their heads down. The country is prepared to flex its military muscles and its diplomatic ones too. What is more it has plenty of reserves to unlock.

In more peaceful climbs the oil is most definitely peaking. There is peak oil in the North Sea, both in the U.K. and Norwegian sides. No matter how many new techniques are brought on to enhance oil recovery the province will be near dry in fifteen years. The U.S. may hold on for a bit longer, and it might be able to do something with shale, tars and sands but there is little certainty of that. Indonesia may also be squeezing out some extra capacity but as a country it holds an almost unique place. A member of OPEC that has peaked and is also a net importer.

Then we can turn to the rest of OPEC and most notably Saudi Arabia. The vicious, corrupt western-friendly junta will continue to supply a lot of oil to the markets. But as OECD countries like the US turn to other sources of fuels, such as ethanol and biodiesel, Saudi and the rest of OPEC are saying that any such moves will mean it will cease to invest in any new capacity. Why should OPEC invest in new capacity if western countries are going to grow their own?

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