No Escape From Dependency

By Michael T. Klare, Tomdispatch.com. Posted December 9, 2004.

When George W. Bush entered the White House in early 2001, the nation was suffering from a severe "energy crisis" brought on by high gasoline prices, regional shortages of natural gas and rolling blackouts in California. Most notable was the artificial scarcity of natural gas orchestrated by the Enron Corporation in its rapacious drive for mammoth profits. In response, the president promised to make energy modernization one of his top concerns.

However, aside from proposing the initiation of oil drilling in Alaska's Arctic National Wildlife Refuge, he did little to ameliorate the country's energy woes during his first four years in office. Luckily for him, the energy situation improved slightly as a national economic slowdown depressed demand, leading to a temporary decline in gasoline prices. But now, as Bush approaches his second term in office, another energy crisis looms on the horizon – one not likely to dissipate of its own accord.

The onset of this new energy crisis was first signaled in January 2004, when Royal Dutch/Shell – one of the world's leading energy firms – revealed that it had overstated its oil and natural gas reserves by about 20 percent, the net equivalent of 3.9 billion barrels of oil or the total annual consumption of China and Japan combined.

Another indication of crisis came only one month later, when the New York Times revealed that prominent American energy analysts now believe Saudi Arabia, the world's largest oil producer, had exaggerated its future oil production capacity and could soon be facing the wholesale exhaustion of some of its most prolific older fields. Although officials at the U.S. Department of Energy (DoE) insisted that these developments did not foreshadow a near-term contraction in the global supply of energy, warnings increased from energy experts of the imminent arrival of "peak" oil – the point at which the world's known petroleum fields will attain their highest sustainable yield and commence a long, irreversible decline.

How imminent that peak-oil moment may in fact be has generated considerable debate and disagreement within the specialist community, and the topic has begun to seep into public consciousness. A number of books on peak oil – "Out of Gas" by David Goodstein, "The End of Oil" by Paul Roberts, and "The Party's Over" by Richard Heinberg, among others – have appeared in recent months, and a related documentary film, "The End of Suburbia," has gained a broad underground audience.

As if to acknowledge the seriousness of this debate, the Wall Street Journal reported in September that evidence of a global slowdown in petroleum output can no longer be ignored. While no one can say with certainty that recent developments portend the imminent arrival of peak oil output, there can be no question that global supply shortages will prove increasingly common in the future.

Nor is the evidence of a slowdown in oil output the only sign of an unfolding energy crisis. Of no less significance is the dramatic increase in energy demand from newly-industrialized nations – especially China. As recently as 1990, the older industrialized countries (including the former Soviet Union) accounted for approximately three-quarters of total worldwide oil consumption. But the consumption of petroleum in developing nations is growing so rapidly – at three times the rate for developed countries – that it is soon expected to draw even.

To meet the needs of their older customers and satisfy the rising demand from the developing world, the major oil producers will have to boost production at breakneck speed. According to the DoE, total world petroleum output will have to grow by approximately 44 million barrels per day between now and 2025 – an increase of 57 percent – to satisfy anticipated world demand. This increase represents a prodigious amount of oil, the equivalent to total world consumption in 1970, and it is very difficult to imagine where it will all come from (especially given indications of a global slowdown in daily output). If, as appears likely, the world's energy firms prove incapable of satisfying higher levels of international demand, the competition among major consumers for access to the remaining supplies will grow increasingly more severe and stressful.

Michael Klare is a professor of peace and world security studies at Hampshire College in Amherst, Mass., and the author of "Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency."

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