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Recently the Swedish Oil and Gas Network graciously invited me to attend one of their important seminars, at which time I look forward to receiving some valuable information about Iraqi oil, which is the subject of the meeting.
I definitely need more information, because surprisingly I know very little about the energy resources of that country. I have a familiarity with certain aspects of Saudi Arabian oil, and I know something about economic development in the Emirates, as well as Kuwait and Qatar, but my acquaintance with Iraq is distressingly inadequate. As a result I turned to the leading expert in the world on Middle East oil, Dr. Mamdouh G. Salameh.
In a short paper that I received almost immediately, he told me everything about that subject that I or anybody else needs to know in order to hold their own in any seminar or conference on the face of the earth. Among other comments, his paper features the following: "If Saudi Arabia is floating on a sea of oil, Iraq is floating on a Pacific Ocean of that commodity". This is a very important piece of information, and I consider it amazing that it escaped my attention for so many years, or perhaps decades, because my book on oil was published in l980, and it contained no mention of that state of affairs. Dr. Salameh also provided some statistics which brought up to date the materials in his very informative book 'Over a Barrel' (2004).
When I read the sentence given above, I thought back to the discussion following my lecture at the Ecole Normale Superieure (Paris) in 2008, as well as the statement about the war in Iraq made by Alan Greenspan in his book 'The Age of Turbulence' (2007). Dr. Greenspan stated flatly that the war in Iraq was initially about oil, and in my lecture I contended that if anyone knows anything useful about the background to what was taking place in Iraq it should be the former head of the U.S. Central Bank, because in addition to being very smart, he was privy to some of the best scientific and economics information in the world. Even more important, over the years he has been entertained with some of the most knowledgeable gossip.
The thing to be especially appreciated is that while a war to obtain the few buckets of oil dredged from the waters near Denmark could be described as meaningless and grotesque, access to a 'Pacific Ocean of oil' might seem to a few half-baked but career conscious decision makers as well worth a war or two. I'm thinking in particular of someone like the former Prime Minister of England, Mr Tony Blair.
There are many numbers being circulated about the amount of oil that could be produced in Iraq in the present decade. The largest (and most unrealistic) that I have seen is 12 million barrels per day (= 12 mb/d), about 2020, and the smallest (7 mb/d) at that time. This is hardly the place for a discussion of reserve-production ratios, but given the reserve figures provided by Dr. Salameh for Iraq's oil (330 billion barrels, to include "semi-proved" and "probable" resources), the actual oil production of that country might eventually be capable of matching the mythical future oil production of Saudi Arabia that we still hear a great deal about. This point is crucial, and will be extended in the lecture that I will hopefully give in Paris late next month. Something else worth remembering is that for most if not all of the oil producing countries in the Middle East, the difference between production and exports is bound to increase due to increases in domestic consumption.
Before continuing, something of considerable relevance should be mentioned here. Professor (of physics) Kjell Aleclett of Uppsala University sent me a mail saying that most of the oil mentioned above consisted of 'oil in place', and actual reserves came to a little over one-third of the 330 billion barrels Dr. Salameh noted. As far as I am concerned, "semi-proved" and "probably" can be lumped into 'hypothetical reserves', and NOT oil in place. (My oil book went into that concept in detail.) Moreover, the fundamental thing is that the oil in Iraq is often referred to as 'The New Prize'. Before the present weakening of the global macroeconomy, which decreased the demand for oil, some students of Gulf oil claimed that a peaking of oil in that region was inevitable in the coming decade, although I am not aware of anyone saying that Iraqi oil output would soon peak. Moreover, expectations are that there is still a great deal of oil to be discovered in Iraq, as compared to a modest amount -- if any -- in other Gulf countries.
Many years ago I polished my brass, and shined my shoes, and left my barracks at Fort Belvoir (Virginia) to visit the Pentagon (in Arlington Virginia), where I was interviewed in response to the application I had submitted to attend Officers Candidate School. I was, quite luckily, quickly rejected, just as (some years later) I was equally fortunate to be expelled (i.e. 'boarded out') from Infantry Leadership School at Fort Ord (California) on the final day of the course. In any event, of late I have thought about various details and complications involved in making the kind of cost-benefit calculations that important people might have someday asked me to make if I had been able to impress the gentlemen examining me at the magnificent Pentagon, or for that matter in the shabby structure only a few miles from the superb beach and people-watching at Carmel (California).
In the document that Dr. Salameh sent me, he says that without the war in Iraq, the price of oil today might be $40-50/b instead of $75/b. The issue then becomes would the price of oil -- which began a sustainable increase about 2003 -- have experienced the dramatic escalation in 2008, when the oil price topped out at just over $147/b.
This is hardly the place to give a long-winded answer, since it might involve a little algebra, but I recall being told on several occasions just after the turn of the century, that the oil 'Majors' believed that an oil price of about $23/b was likely, and in addition tolerable, while OPEC was calmly intent on reaching the upper limit of a desired price range of $22-28/b. (Remember that shortly before the end of the previous century, the oil price was almost down to $10/b.) An oil price that steadily moved in small increments to or toward $40-50/b might therefore (ex-ante) have been wish fulfilment for everybody on the supply side of the oil market, which for some rather abstract reasons suggest to me that a price of $147 could have been avoided! Moreover, there would have been no widely quoted and disturbing discussions of the likely future oil price by prestigious observers. In those discussions, the price of $147 led to conjecture about a possible oil price of $200/b (or higher), which was interpreted by some movers and shakers -- particularly in the financial markets -- as a prelude to the end of the world.
That leads to a theme I intend to discuss at some length in the next edition of my energy economics textbook (2007). I am speaking of whether the partial economic and financial market meltdown of 2008 would have taken place without the sustained oil price rise that began late in 2007, and accelerated in 2008. My answer is probably not, because that price escalation appears to me to have provided a cost increment (or impulse) that led to an economic downturn becoming a disaster for many individuals.
Allow me to briefly elaborate on some of the above discussion. To begin, the cost of the war in Iraq is far greater than usually cited, which amounts to hundreds of billions of dollars. If correctly evaluated, it may turn out to be in the trillions, because had the Iraqi oil industry been allowed to peacefully develop, they might have the capacity to produce e.g. 6-7 mb/d of oil now, and in addition galvanized ambitions to eventually increase that capacity to 10-12 mb/d. Among other things this would have facilitated the installation of the new energy systems/structures that will absolutely and unconditionally be required in some of the largest energy consuming countries: energy systems in which renewables and alternatives, and additional nuclear, play a prominent role.
Instead, as alluded to earlier, in the cost-benefit analyses that were almost certainly made in the Pentagon and CIA before the second Gulf War, and which probably used ex-post costs and benefits from the first Gulf War as a datum, it was erroneously calculated that certain elements in the global oil picture could be altered on the cheap. The main element almost certainly was the growing power of OPEC. This is not the kind of mistake that should be encouraged before future conflict situations, or brainstorming sessions in which drastic military or political measures are being considered.
Dr. Salameh believes that political and economic instability will likely prevent an increase in Iraqi oil output from the present 2.50 mb/d to maybe 8-10 mb/d by the end of the decade. (I exclude 12 mb/d from consideration, although this number will almost certainly continue to be mentioned in certain restaurants of power, especially after the cognac has gone around the table a couple of times.) I know only a modest amount about instability in that country, but after reading a brilliant article in OilPrice.Com by Zaid Al-Ali (2010), and in the Spectator by Professor Andrew J. Bacevich (2010) -- a West Point graduate and former teacher at that institution, who calls the wars in Iraq and Afghanistan "dumb" -- I must conclude that there is little or no cause for optimism. What is happening in Iraq is an extreme version of 'Murphy's Law', which in this case not only turns on everything going wrong that can go wrong, but at an intensive pace.
I have made it clear in my work that -- ceteris paribusM -- I consider OPEC as the most important factor in determining the future oil price. If I am correct, and the OPEC directorate believes that more money is better for their countries than less money, then it hardly makes any difference (in the short run) what individual OPEC countries are capable of producing. As you learned in your courses in mathematical economics, an absolute key factor for determining the market price in e.g. the (oligopolistic) oil market is aggregate production, and after thirty years of playing counterproductive games, OPEC directors are ready and able to confront that problem in an optimal manner.
Al-Ali, Zaid (2010). Iraq's dangerous and depressing reality. (www.OilPrice.com) August.
Bacevich, Andrew J. (2010) 'Remember Iraq'. The Spectator (21 August)
Banks, Ferdinand E. (2007). The Political Economy of World Energy: An Introductory Textbook. Singapore, London, and New York: World Scientific (New edition, 2011).
(2008). The sum of many hopes and fears about the oil resources of the Middle East. Lecture given at the Ecole Normale Superieure (Paris) and The Asian Institute of Technology (Bangkok, Thailand).
The Political Economy of Oil. Lexington and Toronto: D.C. Heath (1980).
Greenspan, Alan (2007). The Age of Turbulence. London: Penguin Books.
Salameh, Mamdouh G. (2010) 'Some thoughts on Iraq's oil potential'. (Stencil).
(2004). Over a Barrel. Beirut: Joseph D. Raidy.
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Interesting article Fred. I must admit though, I find it surprising that anyone may remain to be convinced that the second Iraq war was about oil. I find your quotes about Iraq's potential reserves and production to be higher than other (perhaps less reliable) sources, and for that reason somewhat surprising. Sustainable 10 mmbpd. That would certainly alter the prospect for world petroleum into the future, making a transition off oil possibly smoothly do-able. I'd be fascinated to see you defend the position in an article submitted to TheOilDrum.com . That site is loaded with bears who've committed their reputations on world production going into severe decline very shortly, in part because they claim that "Western Iraq is full of nothing but sand."
Jim Beyer 9.30.10
When Dick Cheney hosted the closed-doors meeting with the DOE in 2001, among the points discussed were, first, that peak oil would come sooner rather than later, and second, the largest proven untapped reserves were located in Iraq. From there (and even before) it can be seen how toppling Saddam could be favorable to oil consumers. FWIW, I don't think they even wanted to TAKE the oil, as some suggest, merely just get it out of the ground and into the market. But how could they aid Saddam in making that happen after he'd been such a jackass?
Given the importance of executing this well for our long-term strategic interests, it is tragic that Rumsfeld decided to nickel and dime the operation, or that they wouldn't wait for the 4th Mechanized Infantry Division to be redeployed after Turkey refused them access to their border with Iraq.
Ferdinand E. Banks 9.30.10
At the seminar yesterday hosted by the best energy research outfit in the world - which happens to be in the Department of Physics in Uppsala /The Global Energy Institute), it was estimated that at most Iraq would be able to produce 6 mb/d. This is an estimate of course, but the logic for 6 makes more sense than the dream about 12 or 14 making economic sense.
About the war being about oil. On the plane of theory I might be willing to listen to arguments about the war not being about oil, but that war in Iraq may eventually cost the US a trillion dollars. .Why the American taxpayers should be willing to pay that much money just to bring democracy and freedom and all the rest of it to Iraq is something that even dumb George and Condoleeza would have a hard time explaining. So it WAS about oil.
Where the business with the 4th Mechanized Division is concerned, why couldn't the Pentagon have found out about that in advance? But I agree, Jim. The point was not to TAKE the oil, but simply to get it out of the ground, and to get enough of it to upset OPEC quotas, and with luck perhaps weaken OPEC.
About my quotes about Iraqi oil. I trust Mamdouh Salameh on this subject more than anyone else, but like Fred and Len everybody else he might occasionally make mistakes. I don't think that that's important. Incidentally, about Dick Cheney, where energy is concerned, he was probably the smartest of them all. Alan Greenspan was pretty smart too on that subject.
Jim Beyer 10.1.10
I dunno. 6 mb/day = $300 M/day @ $50/barrel. So you'd get to the Trillion after about 10 years of pumping. Plus all the money saved with lower oil prices in general? If the strategy had WORKED, it might not have been that bad of a deal.
Since 2001, the U.S. public debt has risen about 7 Trillion dollars. You can't blame all of that (at least directly) on the wars.
With respect to the 4th division and Turkey, I'm not sure, but I think Turkey decided at the last minute not to allow them to use their border. It would have taken them about 1-2 months to redeploy to Kuwait, but the whole shock-and-awe thing started before then.
Richard Vesel 10.6.10
Well, the FIRST Iraq war was definitely about oil. At the time, the combined proven reserves under Iraq+Kuwait were 25% of the total global number. That would have put an egomaniacal nut-job in charge of 25% of the world's life-blood commodity, and it simply could not be tolerated.
My own, unsubstantiated, personal feeling is that the Oil Boys inside the Bush administration pushed W's buttons to "git the man that tried to shoot my Pa". THEY wanted the oil, and "W" wanted Saddam's head. Now "W" was the guy who had to declare the war... The Oil Boys thought they were going to benefit, as yet this has been elusive ... And we, the taxpayers, have footed a $2 Trillion (with a "T") pricetag.
Is the (oil) barrel you are bent over as uncomfortable as mine?
Ferdinand E. Banks 10.6.10
The second Iraq war was both criminal and criminally stupid, but proving that it has already cost Mr and Ms 2 Trillion might not be easy. 1 Trillion though is likely, and together with the dumb war in Afghanistan a trillion is a certainty.
Of course, you could be right. The streets of Paris were filled with police yesterday, and if this was not true of the streets of Washington, people who could have been doing something else besides so-called security work were hard at work trying to find persons sympathetic to Mr Bin Ladin.
Richard Vesel 10.7.10
Direct costs to the US Taxpayer: $1 Trillion
Indirect costs from economic disruption: $1-2 Trillion
Costs due to loss of domestic and international credibility: Priceless
Ferdinand E. Banks 10.8.10
Richard, you are almost certainly right. The problem for me is that I cant understand how American voters can remain so oblivious to the disasters that have been heaped on them by Bill Clinton, and especially George W Bush, and possibly Mr Obama. Possibly. What the hell has gone wrong in the PX? They still dont have adequate electricity and water in Baghdad. Maybe I'll have to start over at Illinois Tech in the department that booted me out of the place, although....
Don Hirschberg 10.9.10
Here is what every president from Nixon to Obama (except Jimmy Carter) should have said:
We have already become highly dependant on imported oil. Consider that almost every thing that moves moves by burning fossil fuels, particularly oil. Consider that food production depends on oil every step from the manufacturing of fertilizers to working the fields, irrigation, to processing and transportation.
I am not an expert and few of you are. We have to depend on those who know about energy, thermodynamics, geology and mathematics. The people who know and have known about the energy problem had no bully pulpit and the minds of most of use freeze up when faced with quantitative or scientific issues.
But there are some very discomforting facts for me to tell. As for all fossil fuels but in particular for oil, there most likely will never be a replacement. Whether a world that was built on fossil fuels can survive without them is by no means assured. We do not have the option of returning to a simpler time because there are about 23 times as many of us as before we started using fossil fuels. Unfortunately, as was said during the Great Depression, there is not always a place for one more at the table by adding another potato to the pot. And the signal for “family go light.”
No president said it. ----------------------------------------
Jimmy Carter is an exception. He is an Annapolis graduate and knowledgeable about energy, in fact maybe could be considered a nuclear engineer. I suppose he, more than other presidens is most culpable for failing to relate the energy dilemma. This saddens me, as even “one of us” would not put reality before votes.
Ferdinand E. Banks 10.9.10
Don, the problem is not with the leaders - it's with the voters. They are getting exactly what they asked for. And by "they" I don't mean just Joe the Bummer, but Jack the PhD. These days just about any lie sells, and buyers range from high school dropouts to persons on the Nobel short lists.
Let me mention an interesting phenomenon that I saw in Paris this week. Ten years ago the jobs for immigrants were the jobs that the French didn't want, and didn't want their children to have. I lived on the left bank as usual this time, and in every one of those small hotels near the Sorbonne, an immigrant was in the reception. Now these people are taking jobs that the French want. This is no place to discuss the mechanics of that transition, but one thing is certain. On CNN they tell you that no country in the world is growing as fast as Africa, but in truth the place is being looted - with the looters being helped by corrupt 'elites' in those countries.
Don Hirschberg 10.9.10
Professor, we quite agree about the fault lying with the voters rather than the leaders. First of all our energy problem is not something “leaders” (i.e. government), can understand, much less deal with. I’m saying the masses should have known about the problem from Nixon’s time forward.
Politicians, business and the media almost to a man didn’t want to believe there was a dilemma – that this was something quite different. Academics will not jeopardize their grants. And of course candidates for office would not touch the subject. Newspaper editors would refuse to publish some of my letters because they seemed to think I was making this stuff up – they wanted me to cite my sources, I guess because they had never been taught anything about this strange nonsense.
I found that editors wielding great power were just plane ignoramus about anything touching on the subject or even simple arithmetic. But they could not have ignored presidents.
I got polite replies from the White House written by people who obviously had no clue about the subject. Hence it would have been nice if the president said there was a problem, other than wanting to reduce oil imports. It would have been nice if the National Academy of Science would have said there is a problem. It would have been nice if the public conviction that science and technology can solve all problems were challenged.
The population is still not convinced, else we would not still be building huge new suburbs with big lots far from places to work or shop or go to school with absolutely no public transportation. And using up prime land that could be used to supply huge quantities of food for the adjacent metropolis. If the public had not been living in a fool’s paradise all these decades we would be far ahead in mitigation.
David Bruderly 10.11.10
The most cost-effective solution to our oil problem is to implement policy that will actually achieve the oft-stated objective of ending our total dependence on liquid petroleum-based motor fuels. How? Start using natural gas to power motor vehicles. Natural gas is affordable, scalable, clean, readily available and is a proven technology. Millions of affordable natural gas vehicles can deployed very quickly if automakers are simply asked / encouraged / mandated to start mass producting affordable multifuel capable vehicles.
A multifuel capable vehicle is a vehicle that can operate on either a liquid petroleum-based motor fuel or a gaseous motor fuel (i.e. natural gas). This technology is proven, affordable and easily integrated into existing vehicle platforms, especially the larger pickups, vans and SUVs that are needed to utility needs of many consumers. With a millions of multifuel capable vehicles in the hands of CONSUMERS people will actually be empowered to choose the type of fuel that best suits their needs -- not what some tin-horn dictator or politician dictates.
Talk about free-markets! Break the oiligopy with competition.
Givng consumers the ability to actually choose their motor fuel will introduce real competition that will save consumers money and eliminate supply uncertainty. In addition, beginning transition to low carbon motor fuels will have the happy side benefit of reducing tailpipe emissions and lifecycle carbon emissions. In addition, natural gas is a cost-effective and clean feedstock for production of hydrogen. Deployment of natural gas motor fuel infrastructure will prepare a robust foundation to facilitate introduction of hydrogen fuel cell electric vehicles when these machines become affordable and reliable in the not too distant future.
Regarding the straw man objection of "there is no infrastructure" note that any competent engineer and contractor team can install a compressed natural gas fuel station within 3 months of delivery of compressors. And with natural gas energy costs about $1.50/gge lower than oil the economic benefits to both consumers and fuel station developers are very attractive.
Frankly I think it is time for the auto industry to empower the American people to purchase the cleanest, cheapest domestically produced low carbon motor fuels available on the market today. It is time to empower Americans to put an end to their oil slavery.
Fred Linn 10.11.10
David Bruderly-----" The most cost-effective solution to our oil problem is to implement policy that will actually achieve the oft-stated objective of ending our total dependence on liquid petroleum-based motor fuels. How? Start using natural gas to power motor vehicles."-----
I think we need to require that all new vehicles sold in the US be multi-fuel and biofuel capable.
Ferdinand E. Banks 10.12.10
I've always been skeptical about this gas thing, but I'm not sure any longer. It's possible that the $147/b oil price was the concrete block that broke the camel's back, and if that was true, what kind of beating will all of us take if we find ourselves facing that price again. Write the Energy Department and tell them to forget about the nonsense they are dealing with, and get somebody to take a careful look at what can be done with gas.
Jim Beyer 10.12.10
If every multi-fuel vehicle (can use gasoline or NG) is $3,000 more (not too far off) that would mean the consumer would need to refuel the vehicle about 200 with NG in order to reach parity. That's maybe 60,000 miles of driving. Perhaps not too bad, but price difference is less if fuel taxes are added. NG vehicles also have reduced trunk capacity due to the tank size.
I think fuel taxes (road taxes) on NG are highly problematic due to the motivation to cheat. And unlike fuel oil, one cannot dye natural gas!
Also, I think the recent boom in NG production from shale fracturing will prove short-lived.
Despite all these problems, I do support NG for vehicles. It's just that it's a bit of a bitter pill to swallow to keep us from walking off the cliff that is peak oil (hmm, my first mixed metaphor of the day....) I think something like this needs to be explained to the consumer for it to be accepted. Remember we are competing with "Drill, Baby, Drill".
Ferdinand E. Banks 10.12.10
Jim, why this skepticism about shale gas? Something there doesn't smell right, but everybody who is enthusiastic about it cant be a scammer.
Michael Keller 10.12.10
I believe the "dumb" voters are about to drop-kick large numbers of elitist democrats (and republicans) over the side. With them will go subsidies for renewable energy and a whole host of similar monumental wastes of money.
I, for one, do believe in the American republic. Seems to me, Europe and most of the world would be under the thumb of the fascists and communists if it had not been for the U.S. and our "dumb" voters.
Was the Iraq war a mistake? Maybe. However, was a pretty good "kill box" for snuffing out Islamic terrorists, which I believe was the actual objective of the war; oil was not the objective.
Ferdinand E. Banks 10.13.10
Michael, we agree about one thing. It was people like us - Americans - who saved a lot of bacon when the facists and communists got hungry.
But you are COMPLETELY wrong about Iraq. That war has created what you call "terrorists". It was the next biggest mistake of an American government in modern times. The biggest was dumb Bill Clinton's not sending a couple of billion dollars a month to Iraq to put their hospitals in shape, and to buy the medicines they needed. Of course, doing that was too simple for that simpleton.
Len Gould 10.13.10
"Seems to me, Europe and most of the world would be under the thumb of the fascists and communists if it had not been for the U.S. " -- As Canadian, sorta sticks in my craw.... Agreed, would have been a lot more difficult w/out US, but Britain and Canada etc. did it for almost three years while US supplied arms and resources to Axis. Germany would have eventually been defeated by Russia (who actually knew how to build tanks) regardless of US, and Japan was simply a territorial takeover provoked by US. Most businessmen in US thought Hitler and Musolinni had great ideas.
Michael Keller 10.13.10
Fred, You need to seriously consider the possibility that I am right. In the context of 9/11, the Bush administration was determined to take the fight to the enemy. As we are seeing now in Afghanistan (and as did the Russians and Brits discover to their woe), it is very difficult to dislodge insurgents from mountainous regions, particularly when considering the Afghanis legendary fierce tribal nature. Much easier to draw the terrorists out onto the plains.
If oil was not the primary objective in Iraq, as I suggest, then theories on the stability of Iraq and oil prices are of only secondary importance.
Seems to me, the way out of the pending “peak oil” crises (and OPEC’s grossly undue influence) is through significantly increased efficiency of the US vehicle fleet (including hybrids), alternate fuel sources and oil from our good friends (who do not get the full thanks they deserve for always covering our backs) to the north, Canada.
Ferdinand E. Banks 10.13.10
Michael, let's clear this business up. That somebody had to answer for 9-11 is clear. But why Iraq? What did they do that they had to be bombed, and the country ruined. The US had an ignorant president, whom they reelected, and that man brought misery to an innocent country (where the US was concerned) and thousands of Americans.
Alan Greenspan says that oil was the object of the war in Iraq, and given his sources, that's good enough for me...although of course he could be wrong.
Michael Keller 10.14.10
Fred, Greenspan is not part of the military and has shown virtually no aptitude for war. The generals and Cheney, on the other hand, know their business.
Iraq is not a mountainous region. Nor is it inhabited by fierce tribes. Saddam provided a plausible reason to enter Iraq and draw the terrorists in. This is more than idle speculation on my part.
Jim Beyer 10.15.10
The Extremist Islam terrorists were primarily fanned into life by the strict madrassas that were built around the world by the Saudis using their oil money. Most of the hijackers were Saudis. By your logic, why didn't the U.S. invade Saudi Arabia? Maybe because S. A. is peaking on their oil resources, while Iraq has plenty left. Not sure that's why they invaded Iraq, but it's a possibility.
Ferdinand E. Banks 10.15.10
Michael, I dont like Greenspan at all, but he is a very smart man, and in a magnificent position to intercept the latest gossip about why bad things happen in this old world of ours. As for Cheney and the generals, the less said about them the better, and expecially the one who has not seen any real combat, but has almost every square inch of his tunic covered with ribbons. 'Perfumed princes' is what David Hackworth - one of the most decorated soldiers in American history - called people like that.
The attack on Iraq was about oil, period. The first Gulf War was wpn on the cheap for the the US, and they thought the same thing would happen in the second. Moreover, if the people calling the shots for the Big PX had not been morons, things could have worked fine.
And Jim, I dont think that Saudi oil is peaking. Forty years ago they said that they would not produce more than 10 mb/d. Now they have announced some very impressive economic goals, and those goals do not go with a peaking oil supply. I could be wrong, but I think that the people running the Arab Gulf states know what they are doing.
Richard Vesel 10.15.10
Regarding shale gas reserves...
Guess where the largest NG field in the world is located?
1200 Trillion cubic ft, about half in Iran, half in Iraq. So the future conflicts in the region may be more about "energy" than just oil. Also, the largest single oil field, shown on the same map, is wholly within Iraq...
Two major North American shale gas fields, one almost fully online, and another in development, are:
TX/LA Hanesville Shale - estimated reserves of 270 Trillion (with a "T") cubic feet, making it the fourth largest reserve in the world, second largest in North America.
PA/OH/NY/WV - Marcellus Shale - estimated reserves of 400 Trillion ("T" again) cupic feet, making it the second largest in the world, and largest in North America.
More shale gas areas are being prospected now that the production technology is beginning to mature. Yes, there are refinements still required to make this technology more benign than it currently is, but that goes for all technologies, yes? Regulation is required to reduce environmental impacts of this technology, especially regarding spurious leakages of methane, a pretty harmful GHG in itself.
A few numbers to consider. If ALL of our electric power were generated by CCGT (combined cycle gas turbine) power plants burning this North American gas reserve fuel, it would meet our power needs for 30 years. So a more realistic 25% of generation would mean 120 years before they alone would be depleted.
This makes NG a perfect "bridge fuel" into a low-carbon power generation future. CCGT power plants are at least 50% more efficient than a coal-fired power plant (Heat rate of modern CCGT is about 7000 Btu/kwhr, versus a CFB avg of 10500 Btu/kwhr). A decently tuned CCGT will emit less than 10% of the NOx & SOx that a CFB puts out, even after scrubbing. (We have tuned gas turbine burners to put out as little as 2ppm NOx without any scrubbing or catalytic conversion. Scrubbed CFB flue gas has about ten times as much.)
CO2 per kwhr from CCGT v. CFB is less than 1/2 (0.45 tons per MWhr for CCGT, v. 0.85 to 1.2 tons per MWhr for coal depending on type)
CCGT ramps rates are much faster than CFB, making them ideal "partners" with renewable energy porfolios containing large amounts of wind and solar generation. A CCGT power plant costs about 1/3 the price of a CFB to build and put online, and can be done in 1/2 the time.
Creating a power generation infrastructure based on combined portfolio of nuclear, NG, wind/solar/hydro/geothermal, eventually completely eliminating coal, would reduce the carbon footprint of our power generation infrastructure by 2/3 to 3/4, perhaps even more - all using current technology - no R&D required. Cost of replacement - less than we have blown (er, spent) on the two wars plus the stimulus package(s)...
What other numbers might be of interest?
Don Hirschberg 10.15.10
Richard, I would much prefer the numbers you posted but here is what I saw on ODAC just today:
Schlumberger says, “… According to the U.S. Energy Information Administration, U.S. shale gas production increased eightfold over the past decade. It now accounts for 10 percent of U.S. natural gas production and 20 percent of total remaining recoverable gas resources in the United States. “
And: “The U.S. Energy Information Administration projects that shale gas will represent 7 percent of global natural gas supplies by 2030.” What will be global demand be in 2030? –to be 93% supplied by conventional NGAS?
Jim Beyer 10.16.10
I don't see the problem of corrupting ground water from fracturing shale formations easily solved. Plus, the wells don't last that long.
Fred, if S.A. is not peaking, they are at least plateauing. I'd heard their water cut has been rising. Of course, no one really knows what the Ghawar field is doing.
Ferdinand E. Banks 10.18.10
Shale gas represents just 7 percent of global natural gas supplies by 2030. There will be quite a few shale gas billionaires, but if that estimate is correct, the rest of the circus might be up a creek