13 May 2016

Oil and Geopolitical Tension

Margolis once again provides some interesting information and succinctly reveals some of the tensions at work in the Saudi-American relationship. Riyadh is plagued by angst and fears about their standing in both the Islamic sphere and larger economic world.

Peak Oil is considered by many as something belonging to the realm of conspiracy and right now with low prices the notion is being mocked by some. The main argument against it is that when prices rise people will develop technologies to discover and access the more difficult sources of oil. They would point to the Canadian Tar Sands as an example of this principle playing out. At one time the exploitation of the Tar Sands was unviable due to the high costs of extraction, pre-refinement and transportation. In the wake of the Iraq War and Katrina the price of oil surged and the Tar Sands became profitable.

With the current plunging of oil prices, the Tar Sands and the US Hydraulic Fracturing industry have been hit hard. The raging fires of present aren't helping either though they seem to be facilitating a rise in the oil market.

The American oil industry and related elements within the economy have been hit very hard and the economies of nations like Venezuela and Russia have also been greatly harmed by the low prices.

And yet OPEC and the Saudi's insistence on refusing to cut production (and raise prices) have led many to speculate there's some kind of plot at work. The enemies of the United States and Saudi Arabia are being greatly affected by the drop in price.

The Saudis have undoubtedly lost billions but they can weather the storm and it is believed by some they are doing this with the long-view in mind. It is suggested they are eradicating their competitors and working with the United States (or aspects of its power-base), to accomplish this larger set of strategic goals.

The portion of the equation that is hardest to resolve is the idea that powers within the US would be willing to wound its own domestic energy industry. Conspiracy minded parties of either the Nativist or Anti-Obama variety believe this is part of some Green plot or internationalist bankers who are determined to provide a scenario that demands US international involvement.

It's hard to say but one can't help but consider Peak Oil when surveying the whole scene. If the scenario is true and it's argued that with no new finds of substance or volume, no new great oil fields left, the powers that be are well aware that the problem is looming. Civilisation is in a race. Will new forms of energy be developed in time or will our culture stay dependent on fossil fuels until it's too late?

There are many possibilities and many scenarios considered. All are speculative. However, if Peak Oil is on the horizon, whether alternatives are viable is really not the issue. In the meantime the world economy is dependent on the petroleum economy. If Peak has been reached or is looming then you can be sure geopolitical thought and action will be dominated by the reality, even if nebulous and difficult to specifically identify. This may well be the key factor in understanding the entirety of events that have taken place since 9/11. The Prize as it has been called cannot be shared and when the chess pieces start to fall, the parties that not only have access to, but control of, the world's oil will become the masters of the world.

But doesn't the present 'glut' defeat this argument? First, the glut must be defined. I've talked about this in other pieces. Will the supply and demand price structure keep things under control?

It's too simple. The petro-dollar and the nature of the economy, the dynamics of political stability, the finance and investment sectors and the larger questions of resource availability all play are part in this impossibly complex equation.

But it's worth noting that in the Peak Oil scenario the escalation of boom-bust cycles, the sharp rise and fall in prices is part of the model. Its advocates have long predicted that as we neared Peak there would be sharp drops in price followed by spikes. They then predict a massive fall or collapse and then the economic and social fallout.

The prices are going up. It will be interesting to see if the price spikes and before long we're paying $4 a gallon for gas once again. And then will the subsequent drop break the economy? Or will we go through another cycle?

No one knows and least of all me but it's interesting to observe and consider. I have no doubt there are many intense and hushed conversations taking place in back offices and in the corners at social events as players seek to determine just what is afoot.

There are those that continue to insist that science and man's ingenuity can resolve the issues surrounding population, limited resources and the environment. There are those who believe these problems are but fabrications.

Considering that scholars and analysts cannot agree regarding what caused the worldwide depression almost ninety years ago I think it's worth considering that such a scenario may be repeated. While I think there is some understanding of the events and causes leading up to it, there are probably more questions than answers. And today the world is far more complex and integrated.

I do know this. Whether it's in reference to geopolitics or economics I find myself increasingly frustrated with Establishment media. Sometimes it's just fluff and non-information but increasingly it seems to me the media is resorting to downright lies.

Some commentators argue we're already in the midst of World War III. It's true the world seems bent on a path for war. It's also true that a lot of people are failing to see it. The US is actively preparing for massive military engagement and it would seem it's doing it all it can to provide the necessary crises and narrative justifications.  

What kind of war will it be? That's a far more difficult question.

When did World War II start? September 1939? June 1940? December 1941? It all depends on your perspective.

For many it started in 1936 in Spain. In Asia it started even earlier in 1931. Certainly looking back we can see these conflicts as setting the stage for World War II. Are we in such a stage right now?

What will be the fallout? Will the United States achieve global hegemony? Will we see the use of nuclear weapons? Will we see global war or perhaps an escalation of the seemingly endless series of low-grade wars that have dominated for decades?

What would endless war, conscription and a war economy do to Western and American cultures, let alone the Church?

Will we see a collapse and subsequent dystopian era? What would that mean for the Church, an era in which college and retirement no longer possess status are in fact all but meaningless?


1 comment:

  1. My understanding of the Peak Oil scenario is that regardless of what extraction technologies exist or how profitable the industry is, the world's supply of refinable fossil fuels will more or less completely dry up within the next 25-50 years at present rates of extraction, notwithstanding the reusing and recycling of existing resources.

    I've read about this before albeit not in exhaustive depth. If the prognosis is true, then the worst-case scenario would be a worldwide global depression and economic contraction followed by a catastrophic world war wherein billions of people would die (if nuclear weapons were used, life on Earth as we know it would cease to exist). In the aftermath, any civilization left would likely degrade to medieval levels, at the very least whatever existed before the dawn of the industrial revolution, i.e. approximately 1750.

    It's a horrifying prospect and I hope it doesn't transpire the way I've described.

    By the way, did you get my e-mail?