Jim Kunstler Commentary – June 20th, 2005

My own is theory is that the war is a desperate attempt by a nation desperate over its energy supplies to retain a foothold, and therefore an economic claim, on the region where the oil is. Iraq was supposed to be our police station in a strategically vital bad neighborhood. The salient questions are: 1.) assuming we can’t stay there forever, how long might we hope to stick around there? And 2.) at that point somewhat short of forever, will we lose our ability to even buy Middle East oil?

The conventional belief is that oil is fungible, meaning that once it enters the universal market pool, it finds its own way to customers, determined by who will pay the most for delivery. This idea was based on the assumption that there would always be a swing producer — some entity that could always open up the valves and goose up the world supply, keeping global prices within a reasonable range. The global production peak — Peak Oil in shorthand — seems to have obviated that mechanism. It’s especially problematic that even Saudi Arabia and the Middle East generally appear to have peaked (see Twilight in the Desert by Matthew Simmons). From now on, access to oil may be determined by other things.
Clusterfuck Nation