Newsletter No.36 – December 2003

in Peak Oil by


280. Burning Buried Sunshine: Human Consumption Of Ancient Solar Energy
281. The UK Government Confesses to Peak Oil and Gas
282. US Energy Policy
283. Reserve Growth is n’t quite what it seems
284. New Book on Depletion and Renewable Energy
285. Correction: wrong Governor
286. Country Assessment – Angola
287. The Ageing of Oil
288. Russia reins in its oil barons
289. Oil Peak Calculations
290. Effect of dollar depreciation on Oil Price
291. The IEA maintains its Reputation
292. Europe retreats from Nuclear Energy
293. Not only oil depletes
294. The Next ASPO International Workshop
295. The Copenhagen Conference
296. A Canadian Broadcast explains the impact of Peak Oil
297. Peak Oil, Renewable Energy, and Zero Growth

280. Burning Buried Sunshine: Human Consumption Of Ancient Solar Energy

(The following abstract of an article by Jeffrey S. Dukes draws attention to the fact that coal, oil, and gas represent vast amounts of stored solar energy. )

Abstract. Fossil fuels developed from ancient deposits of organic material, and thus can be thought of as a vast store of solar energy from which society meets >80% of its current energy needs. Here, using published biological, geochemical, and industrial data, I estimate the amount of photosynthetically fixed and stored carbon that was required to form the coal, oil, and gas that we are burning today. Today’s average U.S. Gallon (3.8 L) of gasoline required approximately 90 metric tons of ancient plant matter as a precursor material. The fossil fuels burned in 1997 were created from organic matter containing 44 ×10 18 g C, which is 400 times the net primary productivity (NPP) of the planet’s current biota. As stores of ancient solar energy decline, humans are likely to use an increasing share of modern solar resources. I conservatively estimate that replacing the energy humans derive from fossil fuels with energy from modern biomass would require 22% of terrestrial NPP, increasing the human appropriation of this resource by ~50%.

Department of Biology, University of Utah, 257 South 1400 East, Salt Lake City
UT 84112-0840, U.S.A. .E-mail: [email protected]
(Reference furnished by Hans Jud)

281. The UK Government Confesses to Peak Oil and Gas and calls for Norway’s gas

The United Kingdom Department of Trade and Industry has issued an amazingly forthright plot, showing the rapid decline of oil and gas production to near exhaustion by 2020, amply confirming the ASPO assessment. It is noteworthy too that the Government is rightly reporting Proved & Probable and Possible Reserves, not simply the financial (“Proved”) numbers as given for example in the BP Statistical Review.

The Government is doing its best to encourage exploration, and this plot was possibly designed to show how desperately it is needed. Realistically, however, given the long decline in discovery since a peak in 1973, the chance of adding enough to make any material difference to the decline is slim indeed. Perhaps, on this occasion, the Government would be well advised to follow a US lead outlined below (Item 282)

The November issue of the Petroleum Review reports Britain has made an agreement with Norway for the construction of a new pipeline from Norway to supply 20 Gm3 per year from 2007, adding that imports will rise to 90% by 2020. Norway faces a dilemma as to the rate it allows its resources to be depleted. The national interest would be served by conservation, while flawed advice from flat-earth economists and possibly pressure from the European Union may call for rapid exploitation. Norway has already diverted 120 billion dollars of excess oil revenue into an investment fund, whose future is gravely at risk as depletion undermines the market. Will it make the same mistake with its gas?

(See Petroleum Potential of the United Kingdom Continental Shelf in Promote United Kingdom 2003)

282. US Energy Policy

President Bush outlined US Energy Policy in an address to the Central Aluminum Company of Columbus, Ohio on 30 October 2003. He evidently sees the need for government intervention, tacitly accepting that the market has failed. It is noteworthy that he stresses moving to nuclear, coal and energy from wind, sun, and biomass rather than securing the country’s needs by conquest. Many will be surprised at these words of sense.

President Bush: – To keep this economy moving, to sustain growth far in the future so people can work, we need a sound national energy policy. Every person who owns a home, every person who works on an assembly line, every person who drives a truck or runs a small business depends on reliable, affordable energy. That’s what we depend upon. Our economic security and our national security requires secure sources of energy. We must become less reliant on foreign sources of energy.

I’ve come to Central Aluminum because this company and these employees rely on reliable sources of energy. The company spends about 30 percent more on natural gas this year than it did last year. That’s a cost that makes it hard to expand the workforce when money goes into a 30 percent increase in your energy bill. By not having enough energy at home, our manufacturing sector is not doing as well as it should be. When the gas prices go up, the manufacturing sector hurts here in Ohio and around the country. Congress needs to pass a sound energy plan to help deal with the issues that confront this good company, Central Aluminum. First, we need more energy production close to home. We need to produce in our own country, and we need to encourage exploration in our hemisphere, so we’re less dependent from other parts of the world. Our nation and our hemisphere have got natural gas, the energy used right here in this plant. But this resource has been hampered by restrictions on exploration. Congress should allow reasonable exploration and responsible exploration to bring more natural gas to the market, which will lower the costs of the product. Congress should promote research into the next generation of nuclear plants and encourage investment in existing nuclear plants to expand a clean and unlimited source of energy.

Congress should encourage clean coal technology so that we can use our nation’s most plentiful energy resource in an environmentally responsible way. In other words, the energy bill ought to encourage the use of resources close to home. When you increase supply, it takes pressure off price. We need common sense, reasonable energy policy. I call upon Congress to pass that common sense, reasonable energy policy. Part of the energy bill I submitted — and by the way, we submitted a package to Congress two years ago and are grinding through all the details now — but part of that package says America needs a better infrastructure, as well. We need better pipelines, gas terminals, and power lines so that the flow of energy is reliable.

You might remember what happened last summer. I certainly do. The rolling blackout affected this state of Ohio. That ought to be a signal that we need to modernize the electricity grid. The bill we’re trying to get out of Congress understands that. The current grid is old, and it’s inefficient in places. Incredibly enough, federal law discourages new investment in the infrastructure. You got old laws on the books that need to be changed. We’re heading into a new era. We’ve got to think new. We’ve got to be ready for the 21st century. By keeping investors from entering the electricity and the natural gas business, it stifles the capacity to provide more electricity and more natural gas. And remember, when you increase the supply of a product, it takes pressure off a price, which means people are more likely to be able to find a job.

We need to encourage new investment in a modern electric grid ending old rules. We need mandatory, not voluntary, reliability standards for our power companies. We now need to make sure that the placement of new power lines, which often get bogged down because local authorities block transmission lines, that the federal energy officials have the authority to site new power lines. That’s what we need to do. We need to modernize our grid, so the lights don’t go off in people’s homes so that business owners can plan for a stable and expanding work force. We need to wake up and realize we’re heading into the 21st century, and we need a 21st-century energy policy, It is what we need to do.

And a 21st-century energy policy says this country must develop and deploy the latest technology to provide a new generation, a different kind of energy, new sources of energy, cleaner and more efficient energy sources. A lot of companies in Columbus are doing some ground breaking research on what I’m talking about. For example, we ought to expand tax credits for renewable energy sources like wind and solar power. We ought to see if we can’t use technology to diversify our energy supply smartly. Congress should fund research in a new hydrogen fuel technology that I called for in my State of the Union. We ought to make sure that we use ethanol from corn and biodiesel made from soy beans. It seems to me to make sense that we ought to use our technology and know how to grow our way out of dependence on foreign sources of energy.

In other words, we need a comprehensive plan. We need to encourage production, and we need to encourage conservation. We need to use the energy resources we’ve got at hand in an environmentally friendly way. And we need to advance new kinds of energy. But we’ve got to get after it. And that’s my message to the United States Congress — resolve your differences. Understand that if you’re interested in people finding a job, we need an energy policy. That’s why I’m here. I want these people working. I want their friends to be able to find jobs. Get the bill done.

(Reference furnished by Kjell Aleklett)

283. Reserve Growth isn’t quite what it seems

IHS reports in a press release that Reserves for fields already found in 1992 are now reported to be 416 Gb higher than they were then, implying an annual Reserve Growth of 2.6%. Some may take this as evidence of technological progress to be extrapolated forward, possibly at an increasing rate. But it may not be quite like that for several reasons. First, there is greater scope to under-report the large fields of the past than is the case for the smaller ones of the future. Second, if the old fields are larger than originally reported, the decline in discovery is steeper. Third, it reveals that the accuracy of the IHS reports, which aim to give a P50 value, such that revisions should be neutral, is deteriorating. That is not their fault. In earlier years, they had close contacts with a few major companies who were responsible for most finds and provided reliable information. Now they have to assemble the information from a host of smaller companies and government agencies who are much more likely to report financial so-called Proved Reserves, which are intrinsically subject to upward revision, being in plain language Proved-so-Far, saying little about the ultimate size of the fields concerned.

The USGS in its famous flawed report of 2000 claimed that reserve growth would amount to 612 Gb (Mean value) over thirty years from 1995 when the reported reserves were 891 Gb. This works out at about 2.5% a year, which sounds a reasonable extrapolation on experience but fails to take into account of the impact of declining field size.

284. New Book on Depletion and Renewable Energy

An excellent new book, entitled Before the Wells Run Dry – Ireland’s Transition to Renewable Energy, Edited by Richard Douthwaite, addresses the dire future for Ireland unless something is done to reduce its dependency for electricity generation on gas imports from Britain, see Item 281 above. (ISBN- 1 84351 037 5).

285. Correction: sorry wrong Governor

The Presidential candidate, Howard Dean, is the former Governor of Vermont and not the Governor of Iowa, as mistakenly reported in Newsletter 35, Item 272
(Information furnished by Kellia Ramares)

286. Country Assessment – Angola

Angola is a former Portuguese territory covering an area of some 1.3 million km2, with a population of about 13 million. A coastal strip is flanked by escarpments, rising to extensive plateaux between 1500 and 2500m above sea level, which in turn give way to featureless plains falling eastwards to an elevation of about 500m. The northern part of the country is drained by the great Congo River, whereas the southern part drains into the headwaters of the Zambesi to flow eastwards across Africa. The cold Benguela Current has led to near desert conditions along the southern coast, but most of the country is forested. It has substantial mineral resources of diamonds, iron, manganese, copper, and phosphate in addition to petroleum, described below.

The country was home to warring Bantu tribes when the Portuguese arrived in 1483 to establish trading posts, largely for slaves who were exported to Brasil in their thousands, a trade continuing illegally after the abolishment of slavery in 1836. Portuguese settlement progressed over the centuries, bringing Christianity and order to the tribal interior. The formal boundaries of the country were set in 1926, and Luanda, the capital, was at its prime a delightful almost European town. The authoritarian colonial rule was administered by Portugal until 1961 when the revolt broke out in the north, accompanied by massacres and reprisals. It gradually spread to the rest of the country until 1975, when Portugal decided to withdraw from its African territories following a radical change of government at home. A Communist-led movement, the MPLA, succeeded in taking power in the main cities by force of arms, establishing close ties with Cuba and the Soviet Union. Cuban troops were called in to help maintain order and did indeed protect the onshore oilfields, operated by the Belgian company, Fina. As many as 300 000 Portuguese nationals, some of whom had been living in Angola for generations had to return to the home country. However, a rival movement (UNITA) calling for total independence, challenged the government, leading to a protracted form of civil war that continued into the 1990s. By 1995, as many as 8000 UN peacekeepers were in the country that was facing appalling conditions, made worse by the widespread use of land-mines, provided by unscrupulous Western arms dealers. Average life expectancy has fallen to 42 years. No doubt the revenues from the burgeoning offshore oil industry have inflamed the political conflict, as different factions sought to get their hands on it. The few surviving old people must look back on the Colonial period as a golden age.

Plate tectonic movements led to the opening of the South Atlantic during the early Cretaceous about 130 million years ago, when rifts developed, to be initially occupied by fresh water lakes. A sequence of such rifts developed progressively westwards as the continents moved apart, each having its own particular set of geological circumstances. Rich oil source rocks were laid down both in the lower part of the sequence in the early rifts and the upper part of the sequence in the later rifts. The sea broke into the lakes during the mid-Cretaceous during an epoch of global warming and high sea-levels. The evaporation of the seawater under these conditions led to the deposition of salt, which formed both a seal to oil migration from below and later, a glide-plane for structural slides, as huge rafts of limestone slipped down the subsiding ocean floor. Oil reservoirs occur within the rifts both in sands and the rafted carbonate rocks, as well as in the Tertiary sediments that later covered the rifts. The latter mainly comprise turbidite deposits, which could be compared with a form of a submarine avalanche, triggered when coastal bars ruptured under storm, hurricane or earthquake to slump into the ocean depths. Their quality as oil reservoirs was locally enhanced where the sediment was taken back into suspension by long-shore currents, which winnowed out the fine-grained material. Many of the traps for oil have a stratigraphic component being partly controlled by contemporaneous seafloor relief that served to pound the reworked turbidite sands. Evidently looking for oil in such an environment is not an easy task, but the system is now well understood.

Exploration commenced in the early 1950s when the Belgian company, Fina, secured rights to the onshore littoral, where it succeeded in finding some modest fields. Attention then turned offshore where the first wells were drilled in 1966 by some companies, including particularly the French company Elf (now Total). A State Company was formed, taking an important position. Attention later turned to the deep offshore during the 1990s following the development of the necessary technology by Petrobras, facing comparable prospects on the other side of the Atlantic. Angola is thus an interesting case of a country, in which the depletion of Regular Oil has been followed by the second cycle of deepwater oil, delivering substantial reserves that had not been anticipated in earlier years. But the deepwater area itself is now becoming mature, yielding no more than modest discoveries over the past few years.

A total of some 600 wildcat wells has now been drilled, delivering about 15 Gb (billion barrels), of oil, of which perhaps ten are in deep water. Peak exploration drilling was in 1968, when almost fifty Wildcats were drilled, but has now dwindled to no more than about ten per year. Production commenced in 1955, since when about 4.5 Gb have been produced. The production of Regular Oil, now standing 700 kb/d, is within a year or two of a midpoint peak, is expected to decline at about 5% a year after that. But that decline will be more than offset by growing deepwater production.

Modelling future deepwater production was challenging. The first approach was based on available information on actually planned developments, shown as “A” on the attached plot. It assumes that the companies will be able to develop their finds as fast as possible under normal short-term economic principles. Alternative Profiles “B” and “C” assume lower paces of activity modeled with Hubbert curves, which could arise either if the government wisely imposes a more staggered development, of which there are some reports, or if other politically inspired interruptions intervene, such as a US invasion. On balance, “B” is seen as the more likely scenario but it is by no means sure.

Most of this oil will be for export, as Angola’s demand is small at 14 million barrels a year (or only one barrel per capita). If oil prices soar in the years ahead, as expected, Angola’s oil revenues will rise to dizzy heights, which in turn is likely to lead to further intractable political problems, associated with many well-lined pockets and foreign bank accounts. It will also be a key source of world oil, which possibly explains the recent US interest in establishing a military base on the islands of Sao Tome and Principe in adjoining waters to the north. It is noteworthy in this connection that according to the Guardian Newspaper, Blair and Bush have stated

“We have identified some key oil and gas producers in the West Africa area on which our two governments and major oil and gas companies could co-operate to improve investment conditions, good governance, social and political stability, and thus underpin long-term security of supply,”,11538,1084958,00.html

It sounds as if they may plan another attempt to impose democracy and market economics at the point of the bayonet in exchange for the region’s oil.

Deepwater production will likely come to an end by around 2040, with the tail end of the Regular Oil production dragging on for about another ten years. Angola will then have to revert to agricultural self-sufficiency. It might be able to achieve conditions reminiscent of those under colonial rule in the early part of the last century, but disintegration and tribal warfare under warlords are unfortunately perhaps a more likely outcome. There are ample land and natural fertility which could support the current population, as its density is very low at only 4 km2, thanks ironically to the tortured recent political and economic conditions, not to mention the land mines. Transition to a new bucolic lifestyle is unlikely to be easy.

287. The Ageing of Oil

The November issue of the Petroleum Review carries an article with the above title pointing out that as many as fifty-one countries are now producing at below their historical maximum rate. It proposes the Depletion Protocol, as already promulgated by ASPO, as a sensible way to manage the transition to reduced oil supply.

288. Russia reins in its oil barons

Russia has imprisoned Mr. Khodorkovsky, the Chief Executive of Yukos, and the country’s wealthiest man, to await trial for alleged fraud and tax evasion. The precise circumstances remain obscure and are probably not what they seem, but it may be significant that Yukos was in negotiations with American companies interested in taking a stake in the firm. The government probably wishes to retain firm control of the national oil resources, recognizing their extreme geopolitical importance about the Middle East situation and the increasingly desperate need for the United States to secure its sources of critical imports. Israel has offered Mr. Khodorkovsky a welcome which itself may carry a message, and his holdings are being managed by proxy by no less than Lord Rothschild (see A Falling Tsar by Chrystia Freeland, Financial Times 1st Nov 2003).

289. Oil Peak Calculations

A valuable study of peak oil by Danielle Iannuzzo at an Italian university can be found on

290. Effect of dollar depreciation on Oil Price

The dollar has been depreciating against most major currencies since November 2000 implying the cost of oil denominated in dollars has been falling to for example European users by a surprising amount. Oil trading at $30/b in dollars of 2000 now costs only about $22/b in Euro terms. The main producing countries are also losing revenue by like amount, which, political anti-American considerations apart, may explain the new interest in the Euro as a currency for oil transactions, although the market presumably already to some extent takes all this into account in its pricing. (Information furnished by Rune Likvern)

291. The IEA maintains its Reputation

The International Energy Agency has released a new report entitled World Energy Investment Outlook. It is surprising to find that it declares itself to be a consumer lobby group, although that is far from written in its foundation Treaty. In fact, it’s grossly flawed and misleading analysis may do anything but serve consumer interests, but it is at least something to hear it confess to being less than objective.

It maintains the myth of oil demand and supply is rising to 120 Mb/d by 2030, stating that it has decided that there are adequate oil resources to meet that demand. It claims that 490 Gb await discovery onshore and 450 offshore, exceeding even the Mean value of the famous flawed study by the USGS of 2000. It evidently sees supply as simply a matter of investment, adopting classic flat-earth economic principles. The report indicates that 2.25 trillion dollars would be needed to furnish the indicated demand for oil and gas, but it does admit that for every four dollars invested, there would be expended in offsetting the current decline, with only one going to adding new capacity. This seems to imply that it imagines that unknown and unforeseen miracle technology to improve recovery would consume three-quarters of the expenditure, with one going to a new discovery. The report is written in tortured investment terms, making it very hard to penetrate what the actual production and reserves assumptions are.

The study supposes the Middle East would furnish 44% of the World’s oil needs by 2030, provided it attracts the necessary investment, or in other words produce 53 Mb/d, compared with its current 21 Mb/d. But it blithely assumes that, if constraints in investment there should arise, the other countries would simply make up the difference, such that the Middle East would lose market share (intended as a veiled threat no doubt, implausible as it is).

The scale of irresponsibility implicit in these implausible assertions by an organization that many governments mistakenly rely upon beggars belief. (Reference furnished by Jim Meyer)

292. Europe retreats from Nuclear Energy

Germany has closed the first of its nineteen nuclear power stations under a policy aimed to close them all by 2025. One-third of Germany’s electricity comes from nuclear power. Given the rapid decline of oil and gas from natural depletion, it poses the question of what they are going to do without nuclear power. Perhaps Germany will lead the world into new policies of reducing waste, now running at a monumental level. Britain’s nuclear industry is also virtually bankrupt having been privatized and having found it hard to compete with cheap gas which has been produced at an infinitely small fraction of replacement cost. UK gas production will have virtually ended by 2020 as now admitted by the government (see Item 281 above ). France, however, remains a firm supporter of nuclear energy, which provides 80% of its energy needs, with potential for export. (Information furnished by Kellia Ramares)

293. Not only Oil depletes

The attached graph shows that World Grain production has not increased sufficiently to support per capita consumption, which peaked in 1985. According to Lester Brown of the Earth Policy Institute, speaking at the Rimini Conference (see Item 269), an increase in average temperature of one degree causes a ten percent fall in crop yields. Furthermore, the aquifers of many of the world’s grain growing areas are being depleted. They are mainly fossil aquifers not being replenished fast enough to match extraction. Petroleum is commonly used to fuel the pumps needed for irrigation. Furthermore, the new genetically engineered crop types have high yields but reduced root systems, such that they have a voracious appetite for both water and synthetic nutrients made from petroleum. It has also recently been announced that it is near impossible to reduce the use of one of the banned pesticide chemicals held to be responsible for the hole in the ozone layer.

Accordingly, it begins to appear that the peak and decline of oil may be matched by a peak and decline of food production. In this connection, it is worth recalling that from the time of Christ until around 1750, peasant farmers employing sustainable agricultural methods only just succeeded in supporting a population in the 300 to 500 million range. The entry of coal-based energy was accompanied by a rise in the population to about one billion by 1850 when the first oil wells were drilled. A six-fold increase in population followed rising in parallel with the growing oil production. This brief explosion of energy and people was out of all context with what had preceded it. Logic proclaims that the population will also have to decline in parallel with depleting oil and gas. The peak and decline of per capita grain production may herald this new direction. The manner of decline does not bear thinking about, but the scope for slaughter by modern weaponry has been confirmed in the two recent wars.

A new book by Lester Brown entitled Plan B – Rescuing a Planet under Threat and a Civilization in Trouble, exposes the grave risks. (Reference furnished by Jean Laherrère)

294. The Next ASPO International Workshop

The ASPO Organising Committee in Germany has announced that the Third International Workshop on Oil and Gas Depletion with being held in Berlin on May 25th and 26th 2004. The detailed program will be announced in due course.

295. The Copenhagen Conference

A conference entitled Oil Demand, Production, and Costs – Prospects for the Future will be held in Copenhagen, on December 10th 2003, at the IDA Conference Centre, Kalvebod Brygge 31-33.,

The programme is as follows (see )

9.00 – 9.10 Welcome, Per Ole Front, President of the Society of Danish Engineers
9.10 – 9.30 Opening of conference
9.30 – 9.45 Brief Introduction of Paper and Problems, Klaus Illum, ECO Consult

Chairman Mr. Christopher Skrebowski, Editor of Petroleum Review, UK

9.45 – 10.30 The Need for an Oil Depletion Protocol,
Colin J. Campbell, Association for the Study of Peak Oil (ASPO)
11.00 – 11.45 Title to be announced, Donald Gautier, US Geological Survey
11.45 – 12.30 How to Estimate Future Oil Supply and Oil Demand?
Jean H. Laherrère, former President of the Exploration Commission of the
Comité des Techniciens of the Union Française de l’Industrie Pétrolière

Chairman Dr. Paul Metz, European Business Council for a Sustainable Energy Future, and IntegerConsult,
13.30 – 14.15 Reserves Growth, Francis Harper, Manager of Reserves and Resources at BP
14.15 – 15.00 The World Oil Production Capacity Model, Ali Morteza Samsam Bakhtiari,
Iranian National Oil Company
15.00 – 15.30 North Sea Oil Resources, Chris Skrebowski, Editor Petroleum Review
16.00 – 16.30 Oil Depletion Scenarios and European Energy Supply Policy, Jørgen Henningsen,
Principal Adviser to the Directorate-General for Energy and Transport.
16.30 – 17.00 Oil Depletion Scenarios and Future Energy Policy – A Comment, Svend Auken,
Member of the Danish Parliament for the Social Democratic Party, Former Minister of
Energy and Environment.
17.00 – 18.00 Panel Debate and Discussion

296. A Canadian Broadcast explains the impact of Peak Oil

A rather good exposition of the depletion issue has been broadcast in Toronto by Stephen Kerr on the Newspeak Program
(Reference furnished by Paul Metz)

297. Peak Oil, Renewable Energy, and Zero Growth

A scientific analysis of some of the issues relating to renewable energy is contained on the following website, and peak oil is discussed on (Reference furnished by Dr. David Doty)
Another valuable site is (Reference furnished by Kenneth Meyercord)

298. Caspian and Iraq Exports

Although the Caspian turns out to have been a less prolific source of oil than was at first hoped when the Western companies moved in on the fall of the Soviets, it has nevertheless yielded several new fields with oil for export. Wisely using World Bank funding, no doubt supported by the United States, BP has started construction of the 3 billion dollar Baku-Tbilisi-Ceyhan (BTC) pipeline from Baku to the Mediterranean coast of Turkey. It is designed to have a capacity of 1 Mb/d and to be in operation by 2007, providing an outlet primarily for the Azeri-Chirag-Guneshli Field with 5.3 Gb of reported reserves. The line passes through rather an unsure territory, crossing Azerbaijan, where the Presidency has passed to the son of the last incumbent under dubious circumstances; Georgia, whose President, Mr. Shevardnadze, the former Soviet foreign minister, has fallen in the face of a populist rising; and Turkey, the scene of the recent bombing of the British Consulate and a British bank.

It looks therefore that control of the export of Caspian oil will revert to Russia which is strengthening its ties with the former Soviet republics in the region, even constructing new military bases to glare at the US military presence. Recent events also suggest that the Russian government is not about to countenance the sell-out of the national oil industry to foreign companies.
In short, world markets will hardly be flooded with cheap oil from Russia or the Caspian to counter Middle East control.

Conditions in Iraq show little sign of improvement as Patriots fight on. Another intractable element is the scale of the national debt, which is estimated by the Center for Strategic and International Studies (CSIS) at 383 billion dollars, or $16000 per inhabitant. Any new government in Iraq would inherit the debt and face creditors looking to oil revenue to service, if not begin to repay, it. It is difficult to formally write-off the debt because that would set a precedent that other debtor countries would press to follow. Perhaps this is another factor pointing to the fragmentation of Iraq so as to escape the creation of a successor to the debt. But it is difficult to imagine that a fragmented Iraq would offer the sort of environment in which Western oil companies would be comfortable to invest, military considerations apart. Russian or Chinese companies might, on the other hand, receive a warm welcome.

The oil supply situation seems set to become tighter, making it more unlikely that the current world peak in 2000 will be overtaken. Prices are fairly high, teasing the $30/b threshold, but need not necessarily rise much higher if demand is dampened by a return to recession in the face of the scale of US debt, a shift to the euro for oil trade, and a general loss of confidence arising from failed foreign policies.

299. Iranian Official admits to Exaggerated OPEC Reserves

Mohammad Mazra’ti, the manager of the research department for Iran’s Institution of International Study on Energy, has said that the IEA’s estimates of future Saudi production are unrealistic, adding that OPEC Production will peak around 2015. He admits to the unreliable nature of OPEC reported reserves as stressed by ASPO for several years. (Reference furnished by Kjell Aleklett)

300. The Journal Nature addresses oil depletion

The journal Nature has published a series of articles on peak oil. Although some of them are of superior quality, it is significant that the subject now attracts the attention of a journal that is widely seen as the pinnacle of scientific rectitude.

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