The Oil Drum: Local

It seems that every election season, conspiracy theories arise that the oil companies are trying to bring down gasoline prices in order to influence elections. The thinking is that oil companies tend to favor Republicans (true) and that they bring prices down to help Republican candidates. When I hear this sort of talk, I try to explain to people that U.S. oil companies control so little of the world oil market that there isn't much they can do to influence prices. They simply don't have the stroke that people think they have.

But a poll in 2006 showed that nearly half of Americans thought Bush had successfully manipulated prices down as the election approached:

Almost half of all Americans believe the November elections have more influence than market forces. For them, the plunge at the pump is about politics, not economics.

Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output. “But I think the big important reason is Republicans want to get elected,” Mohr, 66, said while filling up for $2.17 a gallon. “They think getting the prices down is going to help get some more incumbents re-elected.”

It's election time in New Zealand and Finance Minister Michael Cullen has mentioned Peak Oil in a campaign speech he gave on Wednesday, decrying the state of funding for rail transport and declaring "a new era in the rail industry".

Given the energy challenge we face in coming years, the so-called black hole of rail funding looks more like a pot-hole that urgently needs filling.

In 1908 our predecessors built the North Island Main Trunk line because they had a vision for a much more populous New Zealand and for opening up the North Island to settlement and economic development. The Main Trunk justified the faith of the settlers for more than 50 years, before the rise of road and air transport – helped by cheap oil prices – diminished its role as a carrier of both freight and passengers.

Today we have to come to terms with a new set of circumstances – the emerging reality of Peak Oil and the impact rising fuel prices have on our economy. Rail's energy efficiency has a new relevance and a new importance.

I am a Queenslander born and bred, so I think that I am allowed to point out that it is rare for words such as “forward thinking”, “courageous”, “radical” and “revolutionary” to be used in relation to Queensland’s elected representatives, but Andrew McNamara may just be an exception. Mr. McNamara is Queensland’s Minister for Sustainability, Climate Change and Innovation, and he seems to be single-handedly trying to save the entire State of Queensland from some of the uglier problems that cloud our future.

As part of this process, McNamara is addressing the issue of oil vulnerability. An introduction to the approach can be found at http://www.epa.qld.gov.au/publications/p02620aa.pdf/Towards_Oil_Resilien...

This is an open letter from Stuart McCarthy of ASPO Australia in Brisbane to Professor Ross Garnaut, who is conducting a public review "to examine the impacts, challenges and opportunities of climate change for Australia".

Dear Professor Garnaut,

Implications of Oil Production Decline Forecasts for Copenhagen 2009

Thank you for providing the opportunity for comment on the Review following the release of your Targets and Trajectories Supplementary Draft Report. ASPO-Australia has followed the Review with interest as oil depletion is very much the ‘other side of the coin’ regarding anthropogenic climate change.

We are deeply concerned that your Draft Report explicitly rejects the notion that oil depletion will constrain economic growth within the next 50 years despite very strong evidence to the contrary. In our view the resulting analysis, conclusions and policy recommendations are flawed and will probably exacerbate the climate change mitigation problem.

_{Figure 1. Colin Campbell/ASPO World Production Profile, Oil and Gas Liquids, 2007 Scenario}

Sydney Lord Mayor Clover Moore recently addressed the NSW State Parliament on the subject of peak oil (via Energy Bulletin).

Tonight I speak about a serious concern of my constituents about the consequences of peak oil, which will have grave local and global impacts. The term "peak oil" refers to the stage when global oil production peaks and future oil production begins to decline. With the global demand for oil increasing rapidly, production declines are predicted to result in severe petrol price increases as buyers compete for supplies. Given the dependence on oil, including for energy, food, travel and consumer products, disastrous impacts on the global economy are expected. While some say peak oil has already hit and others say it will occur in 2030, it is essential that we prepare. New South Wales and Sydney's over-reliance on petrol makes us extremely vulnerable to impacts, and we must protect current and future generations. Given the consequences of peak oil and the serious threat of global warming leading to climate change, governments have a responsibility to urgently reduce our dependence on fossil fuels.

Update: 9/17: This legislation passed 236 to 189 the House of Representatives yesterday. The Senate is not scheduled to vote on the same legislation. Instead, it is working on a drafting a different plan that would give a handful of southern states the option to expand offshore drilling. It is questionable whether anything can be passed by year end. Also, President Bush has said he would veto the version passed by the house, if such a plan is passed. (But all the representatives who voted for the legislation can tell their constituents they did so!)

Legislation that would remove the ban on offshore drilling is now being debated in Congress, and can be seen on C-Span. What is involved? The area involved is a band between 50 and 100 miles out, along the East and West coasts. These are areas that may contain a little oil, but are not areas where geological evidence would suggest that a significant amount of oil is likely to be available.

Figure 1. Offshore drilling map, adapted from ASPO-USA newsletter article. Oil resources based on MMS 2006 analysis

If you want your say on the kind of major infrastructure projects we need to build ourselves out of (rather than into) a post peak oil mess, here is your chance:

Federal Infrastructure and Transport Minister Anthony Albanese and Infrastructure Australia Chair Sir Rod Eddington have urged all Australians to be part of the Rudd Labor Government's nation-building agenda.

Until 15 October, any member of the public and business community can submit their project ideas to Infrastructure Australia for evaluation and possible inclusion on the National Infrastructure Priority List - the first of which will be handed to the Council of Australian Governments in March 2009.

This post, the second in a series on Geopolitical Feedback Loops (see part 1 here), will outline the various geopolitical feedback loops that operate to disrupt oil and resource production. I've tried to link most of these feedback loops around a common theme of ownership dispute, illustrated below. There are several examples for each feedback loop, but in the interest of time I've just listed them and linked to further information--each could be a post in its own right.

Figure 1: Does the state own oil reserves or the nation? When the two are contiguous it makes little difference, but as they become increasingly dissimilar the dispute drives conflict. While I haven't divided the feedback loops explicitly along ownership lines, this graphic may help conceptualize these processes as a single system.

Prime Minister Gordon Brown, is trying to reassert his authority on the cheap, by publishing an anti-Russian diatribe in today's Guardian (a left-leaning newspaper). It's an impressive exercise in weasel words and tough-sounding emptiness.

Before I take you through it in detail below the fold, let me note again that this sets the tone for public discourse on the topic. Newspapers, even if they have different information on the underlying conflict, have to report the aggressive declarations by Brown and others, and cannot fail to paint that as increased tension with Russia. As Russia responds (and it often does in rather unsubtle ways), reality follows discourse, further inflames it, and the whole process takes a life of its own. Pundits, even well intentioned ones, can then go on to pontificate about evil Russia and a small number of concepts, such as the "energy weapon", enter public lore and become "acquired concepts" (I'm tempted to write "acquired conceits") even when the facts on the ground are rather different.

But by then, the Mission has been Accomplished: the discussion is no longer about our failing energy policies (or rather, the lack thereof), or about our leaders' incompetence, but about the Enemy which wants to hurt us and against which We Must Stand Firm (Behind our Beloved and Fearless Leaders).

I understand our leaders trying this: after all, this is all they have to run on. But why, oh why, does our media have to fall for it hook, line and sinker?

This was posted in May 2007 and is worth reposting today given the new context of tense relations with Russia and worries/suspicion/empty talk about "energy weapons." The original post is built as a discussion an an Economist article about Russian gas (A bear at the throat) published in April 2007. Back then, "it took legitimate (if often poorly informed) worries about Russia's sometimes blustering behavior on the energy markets to peddle the usual insane crap that market liberalisation is the only solution to promote energy security." Today, the focus seems to be more on the geopolitical threat the Russia represents, but the conclusion is still, of course, about the incompetence and failure of continental Europe - this time not to liberalize, but rather to 'stand up' to Russia's bullying. Below, the original post, with some additional comments written today in italics and [between brackets]).

[Last year] I spoke at a debate on Gazprom at IFRI, a French think tank. That conference was organised after the publication of two quite different articles about Gazprom:

Gazprom as a Predictable Partner. Another Reading of the Russian-Ukrainian and Russian-Belarusian Energy Crises by Jérôme Guillet
Gazprom, the Fastest Way to Energy Suicide by Christophe-Alexandre Paillard

The titles give a hint that the papers start from pretty different positions - as you can see in the executive summaries of each that I am posting below, [but they in fact reach fairly similar conclusions, which are still relevant today]