Peak Oil is You
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Page added on August 5, 2014
The Secret, Simple Reason For High Oil Prices
Why are oil prices so high, after inflation above 1980 record highes? Peak oil enthusiasts have explanations (usually wrong, like their forecasts). There are many factors at work, including one simple but hidden reason: American foreign policy. The USA has played a large role in the suppression of oil production in three major oil producers, including two nations with some of the world’s largest petroleum reserves — and having the greatest potential for increased production. Perhaps it’s a coincidence that we’ve intervened in three oil producing nations, and high oil prices are an accidental by-product of our good intentions.
Contents
- Iran
- Iraq
- Libya
- Another perspective
- For More Information
(1) Iran
After a long history of interference in Iran’s government, we initiated an ever-tightening and broadening array of sanctions on Iran after the 1979 revolution — continuing until today. See a list here; Wikipedia has details on US sanctions and the UN sanctions the US promoted. For analysis see the Council on Foreign Relations and the US Institute of Peace (USIP).
For analysis of sanctions impact on Iran’s oil industry see this USIP report: part one and part two. They’re working. Iran produced 6 million barrels/day of oil in 1974. In July their exports hit a five-month high of 600 thousand b/day.
Iran has vast untapped reserves. See the EIA’s report on Iran. From the EIA:
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EIA, 10 December 2013
(2) Iraq
Following Iraq’s invasion of Kuwait, in August 1990 the UN imposed a broad array of financial and trade sanctions on Iraq, which lasted until the US invasion and subsequent destabilization of Iraq.
The below graph is by James Hamilton. The dotted line shows their potential, which US actions have helped remain in the indefinite future. For details see the EIA report on Iraq.
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Iraq oil production by James Hamilton, 15 June 2014
(3) Libya
On 17 March 2011 the UN Security Council passed Resolution 1973 which authorized US and others’ involvement in the Libyan civil war. As with Iraq, our well-intentioned intervention has crashed their oil production. For details see the EIA report on Libya.
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Libyan oil production, 10 October 2013
(4) Another perspective on oil and US geopolitics
The key to a great story is not who, or what, or when, but why.”
— Elliot Carver, in Tomorrow Never Dies (1997)
Why has the US done these things? To find the reason, see the result. Widespread suffering? Hopefully not. Setting the Middle East ablaze? Unlikely. Higher oil prices? That would imply that oil companies (and perhaps others, such as the Saudi Princes) have a powerful influence on US policy makers — sufficient to trump the interests of the US people.
That would imply that we don’t clearly see the world. Like President Kennedy the athletic family man in fact being a womanizing near-cripple. Or the US and UK government keeping the war-winning ULTRA code-breaking secret for 29 years after WW2. Or any of the other things we didn’t know in 1963, so that our picture of the world was radically wrong.
Is it possible our vision of the world is as blind today as it was then?
27 Comments on "The Secret, Simple Reason For High Oil Prices"
Dubya on Tue, 5th Aug 2014 5:49 pm
I am eagerly awaiting the “planned” Iraq production numbers.
tahoe1780 on Tue, 5th Aug 2014 6:08 pm
Gee, They’re not using their oil to develop their countries (bombed/ sanctioned back to the stone age). Keeps some in reserve and kicks the can back a bit, no? Resulting higher prices good for tar sands and domestic drillers, frackers, pipelines, and rail too.
steve on Tue, 5th Aug 2014 11:50 pm
oh shit..! pack it in! time to go home!..this douche bag figured it out….whpeww that was a close one! just in time for football season…I think I am going to jack my truck up another 2 feet too….chicks dig that…Who would have thunk that the high prices don’t have anything to do with the depleting supply of easy to get oil….!@
yoananda on Wed, 6th Aug 2014 3:35 am
So high prices in 2008 are caused by forein policy en 2011 ?
Ok, right, sure …
why didn’t I figured it out myself before ???
Nony on Wed, 6th Aug 2014 4:08 am
Good article. Adelman also made the point decades ago that we need to do more to destabilize OPEC rather than stabilize it (that our foreign policy was poor).
shortonoil on Wed, 6th Aug 2014 10:39 am
From 1970 to 2010 the price of oil increased 27 times. The cost of production increased 41 times. Oil, per unit, was more profitable in 1970 than it was in 2010. If one believes this author that must have been the result of US foreign policy? Of course, it could not have had anything to do with the fact the the world’s useable petroleum reserve is depleting. Petroleum must be different than the thousands of other extractive commodities that have succumbed to depletion over the last two thousand years.
The oil age is rapidly coming to its conclusion, and the civilization that has been built from it will be ending with its demise. Articles such as this obfuscate the true problem we are facing. They deter any response that may help to mitigate the coming inevitable, and difficult transition that must be endured. The author undoubtedly believes that the “miracle of the market” will solve our problems in a painless, and efficient manner. Such conclusions are ill informed determinations based upon false hypothesis, and unproven theorems. They are nothing more than hopium on a stick!
http://www.thehillsgroup.org/
Davy on Wed, 6th Aug 2014 10:51 am
Short, funny how cornucopians always have the belief technology and the markets will solve any problem if allowed. IMO we are seeing so many positive energy articles because of cognitive dissonance among the cornies. Markets do not function well with pessimism and a bleak future. Consequently they need constant good news and reassuring news to keep the markets greased.
Northwest Resident on Wed, 6th Aug 2014 11:46 am
Davy, as you know (most likely), I have been making “my case” recently with posts on this forum that TPTB — whoever they are — have the situation more or less firmly under control, and are actively managing our descent into the post peak oil world. In my opinion, the reason we are seeing so many positive energy articles is because TPTB have determined that the vast majority of people are incapable of change, and that the single greatest danger to themselves and to ongoing human civilization is for that vast majority of people to realize the truth of our dire global situation. Panic and riot and dog-eat-dog mayhem must be avoided at all costs. To accomplish that, and demonstrating that for the time being TPTB ARE in control, all of the major and minor mass media machines — all of which are owned and operated by TPTB — regularly and frequently pump out the “feel good” propaganda which you mention. The restless masses must be reassured, they must be prevented from fully recognizing how screwed they are, they must be kept calm, the illusion of “all is well” must be maintained — for now.
Davy on Wed, 6th Aug 2014 12:07 pm
NR, I believe in your TPTB thesis of control but I am not sold on the degree of control you think they have nor the extent of the master plan. I am all ears with you and Art on these issues but still on the fence.
diemos on Wed, 6th Aug 2014 12:11 pm
Markets are great for what they are; a mechanism for distributing existing resources to productive uses.
For many people though, the free market is not a mechanism for distributing resources, it is a god, that will give those who worship it properly plenty and prosperity. You see that attitude a lot among the cornucopians and I fear what the reaction will be when their god fails them.
Northwest Resident on Wed, 6th Aug 2014 12:46 pm
Davy — The degree of control that TPTB exercise is a good question, and debatable. But one thing we can probably both agree on — they totally control “the message”. They control the mass media channels that reach billions of people. They create and distribute the propaganda, they build and maintain the shared illusion of reality and reinforce it regularly with very skillful propaganda. Also, not insignificant, they control the money supply, the financial and industrial centers, and they control the politicians.
That seems like near “total control” to me — or as close to total control as possible.
And Big Brother? They control him too.
Davy on Wed, 6th Aug 2014 1:24 pm
Yea, NR, those examples are spot on. I will say this in my little ole boring local they are not in control. If I want to put a bullet in my head they can’t stop me. If I want to go postal they will not stop me until the ammo runs out. You have a solid point saying the “top” is under their turnkey control. The bottom is not. Especially the bottom where you are under the radar like G preaches. It is not worth their time and is not efficient use of resources to peruse an asshole like me. A part of me would like to go completely offline but the other parts says that is a few short years down the road anyway so enjoy the connection while ye may.
Northwest Resident on Wed, 6th Aug 2014 1:50 pm
Davy — Roger that!
Davy on Wed, 6th Aug 2014 3:09 pm
Side note NR, friggen vermiculite is expensive any alternative that are cheaper and effective?
Northwest Resident on Wed, 6th Aug 2014 3:47 pm
Davy — Yeah, I’ve noticed that a big bag of vermiculite is not cheap. But I figure what the heck, I’m not saving for retirement anyway, because — you know why. Actually, I would consider an investment in vermiculite to be roughly equivalent to “saving for retirement”. If something else less expensive works just as well, please advise!
Davy on Wed, 6th Aug 2014 4:47 pm
Thanks NR. We had .8 inch rain in July no rain yet in August. The ground gets hard as a rock when it gets this dry so I need to lighten it up. I am just going to have to spend some more cash-o-la on the garden. One thing about vermiculite it’s not going to dissolve. I second your retirement fund comment!
shortonoil on Wed, 6th Aug 2014 4:58 pm
“I have been making “my case” recently with posts on this forum that TPTB — whoever they are — have the situation more or less firmly under control”
NR, I have posted here before that our study demonstrates that it is theoretically impossible for the present petroleum based system to continue on for more than 20 years. To do so would require a violation of the Second Law. Since that hasn’t occurred in the last few billion years we don’t expect it to happen in the next twenty. The point you make, that the TPTB (whoever they are) is in complete control is probably correct. But that is completely beside the point. The point is that a time will come in the near future when they won’t be! Their dominance depends on their position in the present society. The present society will not be around for much longer. The dissolution will be chaotic in nature, and there is nothing that the TPTB can do about that. The degeneration of a complex system into a chaotic state results in an outcome that is unpredictable, by definition.
Whether those that survive re-evolve into a Medieval feudal, Mad Max, or some other completely unknown condition there is no way to determine at this point in time. The outcome will be completely controlled by chance. The only way to avoid such a conclusion to our modern world would be to leave the oil age now, before it breaks down completely from its own entropic growth. If the TPTB was aware of our present state, much more would be occurring to bring that about than is happening. In essence, they are just as clueless as the average man you meet in the street.
http://www.thehillsgroup.org/
Northwest Resident on Wed, 6th Aug 2014 5:19 pm
shortonoil — As usual, I find myself completely in agreement with you. I tend to believe TPTB are holding things together for now, with all the tools I described in my previous post, knowing that they can’t hold it together forever and that yes, as you point out, it will devolve to a point beyond their control. Maybe that is already happening. But I tend to think that a lot of those elites in the TPTB Club are using this time, the same as you and I and others on this site, to prepare for the oncoming collapse. I speculate that their preparations are much larger and affect many more people than your or my preparations, for now. I don’t think it is beyond realistic to speculate that some wars might be fought, some financial systems manipulated and other globally recognizable actions instigated by TPTB to “get ready” for whatever they are preparing. But yes, definitely, in the end it is only the energy gained through burning fossil fuel that enables them to maintain their eliteness, and their power. Maybe one day soon we’ll see one of the Koch brothers out planting seeds in his garden, trying to be self sufficient! That will be right before the devil swoops in with his pitchfork to nab another sinner for eternal damnation, of course.
Nony on Wed, 6th Aug 2014 5:34 pm
The Seattle Seahawks cornerbacks commit pass interference.
Davy on Wed, 6th Aug 2014 5:38 pm
Short, words well spoken. I do not have the respect you have here so I only hope others listen to your words. This is more or less what several of us here are talking about. I especially like your references to systematic consequences of PO.
Kenz300 on Wed, 6th Aug 2014 6:52 pm
The simple reason for high oil prices —-LACK OF COMPETITION………..
Bring on the electric, flex-fuel, hybrid, biofuel, CNG, LNG and hydrogen fueled vehicles.
It is time to end the oil monopoly on transportation fuels.
The more choice and options the better………. add to the options walking, bicycling and mass transit…….
JuanP on Wed, 6th Aug 2014 7:23 pm
NWR & Davy, vermiculite is expensive but as Davy pointed out it is a one time investment, it is like surgery for the soil, the benefits last forever, and it is worth every penny on raised beds. Having the right soil mix makes the whole gardening experience different. My mix breaks in my hands into a thick powder when dry and can be worked with my bare hands dry or wet. No tools needed. Peat moss is a few times cheaper than vermiculite and lasts years, but vermiculite is an exploded mineral rock that lasts indefinitely.
The most important part of this mix for me is its excellent drainage and water and nutrient retention. Once that thing is soaked, that water lasts a long time. You get the most out of every drop. So a better soil mix means less water, less fertilizers, less work, less surface area, and more, better quality crops. Worth every penny!
Davy on Wed, 6th Aug 2014 7:29 pm
You sold me Juan!
Northwest Resident on Wed, 6th Aug 2014 8:18 pm
JuanP — Come on, tell the truth. You’re a vermiculite salesman, right? Whether you are or aren’t, you sold me too! I was actually already going to get a big load of it for my soil prep, but now I’m not even going to feel bad about spending all that money. This weekend or next weekend I’m going to harvest my wheat, it is ready. And then I’m going to mix in that vermiculite and other fixins into those planters and plant a bunch of radishes, beets, kale and maybe a couple of other things. I’m not done farming yet!
Northwest Resident on Wed, 6th Aug 2014 8:27 pm
shortonoil — One more thought on your post. There is one way that TPTB could dramatically extend their collective rule over planet earth and of course the oil supply that enables them to rule. How? Engineer a global economic meltdown today, tomorrow, next week — later this year — sometime soon. By crashing the global economic system the oil would stop flowing, billions would die of starvation, cold, lack of medical attention, war and riot and mayhem. Meanwhile, as the mass die-off plays out, TPTB will of course be sitting in their bunkers sipping champagne and smoking Cuban cigars, waiting for a point in time where they can reemerge and start pumping that oil again. Except, that oil will no longer be used to power cars, trucks, widget factories or heavy international trade. Instead, it will be used sparingly, and only to service their well protected and secure mini-civilization. Far flung speculation of course, but perhaps possible. If I was in the TPTB Club, that’s what I would be thinking about doing…
Davy on Wed, 6th Aug 2014 9:07 pm
NR, once complexity is lost “that’s all she wrote” IOW it’s over. It will be a slide down an energy gradient until we reboot at a place of stability and equilibrium. With the multiple predicaments in the waiting it is a guess to when that may be. So those TPTB may enjoy a few short years or months but that will be it IMHO.
Northwest Resident on Wed, 6th Aug 2014 9:40 pm
Davy — I’m sure you’re right. That being the case, I’m guessing TPTB will hang on to BAU as long as they can, until it finally implodes. So much for TPTB being really smart!