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Did the U.S. Pressure the IEA Over Oil Supply Forecasts and Why?
There was a report by the Guardian this Monday that a “whistleblower” from the International Energy Agency (IEA) claims that IEA has been, for years, over-reporting the estimates of oil reserves around the world under pressure from the U.S. government. This would certainly be a cause for celebration by many peak oil theorists such as Matt Simmons, since on the surface, the story is quite plausible.
But before coming to such conclusion, I, for one, simply have not seen proof or evidence offered by the Guardian article nor by the anonymous "whistleblower." On that note, the credibility score went down from there, at least for me.
Facts and proof aside, the first thing popped into my mind is why? The U.S. is a net importer of about 8.8 million b/d of oil as of last month. With the Obama administration's green movement at full speed, understating the oil supply would probably serve the U.S. agenda better than overstating?
Along that same logic, FT.com today published an article refuting the Guardian story. The article says:
"We were particularly baffled by one sentence attributed to one of the Guardian’s sources:
“And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources.”
The US is a net importer of oil and its own oil production is pretty much universally agreed to have peaked. Non-Opec oil supply is also due to peak - according to the IEA’s own report - by 2010, meaning the US will be increasingly dependent on other countries.
So, the allegation is that the US has been talking up future oil production prospects to make it look like it will be more dependent on Saudi Arabia, Nigeria, Iran and Venezuela? It all sounds very odd…."
Unfortunately, getting to the bottom of this is next to impossible. So, it looks like this could become part of the ongoing debate between peak oil and non-peak oil camps. Meanwhile, you may read the full FT article here: Did the US pressure the IEA over oil supply forecasts?
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If an asteroid was on its way to hit Earth in 3 months and there was no time or way to deflect it, would the government tell everyone and let panic collapse everything NOW, or would they wait until there is like one day left?
I would guess that gov will push for solutions to peak oil by calling it solution for climate change...
US does not want a massive panic that will be almost as bad as the actual peak oil situation.
Why is BigOil like Exxon-Mobile downsizing if there is still so much oil to be found and oil is $79/bbl? A lot of people high up know about this. Nobody wants to be the messenger.
Look, before oil people used horses, before horses they ran and walked everywhere. There will be a post oil world. electric acrs can already clock up 120 miles on a charge.
If you move beyond oil, you won't need to send young men to get blown up by nutcases in sandbox states.
That the US is a huge oil importer, and as such wants the prices low, should not come as a surprise to anybody, or does it?
Car industry, among other actors, profits on the ilussion that oil will allways abound...
Probably being naïve here, but are you familiar with "peak oil" concept? It is about when oil production would start diminishing, a quite stablished theory. A well-known prediction of it happening somewhere around 2010 dates back to 1958. (I call it "common sense" too).
What a good laugh at the "Obama administration's green movement at full speed". Obama's administration? Obama's green? Obama's movement? Many oximorons for such a short sentence!
Must know: http://en.wikipedia.org/wiki/Peak_oil
when the Dow goes to 4000 and stays there we will not need as much oil - to hell with peak oil theories.
What is clear to me from reading comments across various website, is the American middle class believes that an endless supply of cheap oil is their god given right and any time oil prices rise it's because evil people (insert Saddam, GS, Obama, Soros as you like) are robbing them and trying to attack their way of life. The truth is, the post war American society was built around the motor car. At then end of WWII, the motor industry, through fair means and foul defined the US society - the deliberate destruction of public transport, the construction of the suburbs, sprawling areas of identikit homes with lawns miles from the nearest shops. The distance Americans have to drive to go shopping, go to school or work all made the motor car a necessity.
All these factors are linked together, the lifestyle, the Dollar, the oil industry. As Carter proved, suggesting Americans should be more frugal in their energy use was seen as political suicide. Suggesting that oil would one day run out, was blasphemy.
Now you have a situation where the indebtedness of the US at every level threatens to cause the collapse of society and the Fed's solution is partly to inflate the debt away, as they know it can never be repaid through economic growth. When you have a limitless and growing supply of USD meeting a limited and shrinking supply of oil, you risk a feedback loop, and you need to do everything you can to stop it getting out of control.
So, step one, deny any evidence of inflation, step two deny any evidence of declining supply and step three, find a good reason (not directly linked to price) why people should consume less. Global warming fits this bill because it says that reducing your energy consumption is not about getting poorer, but about realisng the value of the environment.
However, to question whether US officials would seek to influence supposedly independent bodies is to ignore all the previous times.
And remember, with US politicians, it is always about doing what is good for American business.
Call "power over access to oil resources" "cooperation with Saudi Arabia" and and it describes the current situation.
… getting to the bottom of this is topic of blogs like the oildrum.com and books like Twilight in the desert from Matt Simmons.
In short, Simmons gathered data of the biggest oilfields in the world and at what stage of their lifetime they are and concludes that the world EX Saudi Arabia is past peak.
The Saudi numbers are secret, but the last reported numbers from the seventies with the production since then accounted for support depletion there too.
It seems the refutation of a small part of the Guardian article is overlooking/overshadowing the actual serious nature of the parts which the IEA acknowledged the next day. I.E. The peak of supply being around 2010(now). Is it not obvious that the US and all powers that be would wish this not to be known? The whole economic model is based on and only works well when we have growth, and since there are no cheap readily available, scaleable alternatives, once we have passed peak, it seems very unlikely we can have a return to growth. Without growth how does all that debt get paid back? The ramifications of the governments acknowledging peak oil to be happening now are huge. If you read the report you can see that they are essentially matching demand with supply which has not even been discovered yet. So supply is mere wishful thinking. There is nothing in the guardian article which has not been known to anyone who has been reading the oil drum and energy other sites for the last few years.
The actual point being they are talking up oil production because if it is clear oil supply can not match demand, its fairly obvious this will create panic initially, and then quite possibly along with the other effects of entering the 2nd half of the age of petroleum man, chaos. *In line with the 5th rule of ZH I want to make it clear I dont WISH for chaos, merely that it seems to be a highly likely scenario as we saw already in the summer of 2008 with all of the food riots after the price of oil shooting up priced millions out of their daily bread.
Blah blah blah.
You guys simply do not get it.
There does not have to be a happy ending for your life. You. Each of your individual lives. It takes very little to make this insufficient oil scenario unfold.
Suppose consumption were 80 million barrels per day (it is, approx) and production, FOR WHATEVER REASON, can't get north of 75 mbpd, FOR YEARS.
Simply that. 5 mbpd too little for years. Who isn't going to get their order filled? And make no mistake about this -- it's not slack. You come up 5 mbpd too low, it's not summer drives in the country that don't happen. It's economic activity. Who is going to take the GDP cut?
Better question: Who is going to VOLUNTEER to take a 5% GDP cut?
Right. No one. Wars will start and probably more production will be lost during them. Starvation starts not much longer.
Sashay over to the Baker Hughes rig count and have a look at how the shipments of rigs to Ghawar spiked enormously over the past few years. They are drilling frantically to hold production up. They Are Going To Fail.
And so are you.
Blah blah blah.
You guys simply do not get it.
There does not have to be a happy ending for your life. You. Each of your individual lives. It takes very little to make this insufficient oil scenario unfold.
Suppose consumption were 80 million barrels per day (it is, approx) and production, FOR WHATEVER REASON, can't get north of 75 mbpd, FOR YEARS.
Simply that. 5 mbpd too little for years. Who isn't going to get their order filled? And make no mistake about this -- it's not slack. You come up 5 mbpd to low, it's not summer drives in the country that don't happen. It's economic activity. Who is going to take the GDP cut?
Better question: Who is going to VOLUNTEER to take a 5% GDP cut?
Right. No one. Wars will start and probably more production will be lost during them. Starvation starts not much longer.
Sashay over to the Baker Hughes rig count and have a look at how the shipments of rigs to Ghawar spiked enormously over the past few years. They are drilling frantically to hold production up. They Are Going To Fail.
And so are you.
I often wonder just how much gasoline/oil our military machine burns through every day out there in Iraq and Afghanistan. A whole hell of a lot I bet...they could care less about mpg.
Doesn't help that it is costing $400 per gallon either...http://rawstory.com/2009/10/us-pays-400-per-gallon-for-gas-in-afghanista...
There's a book by Gary Hart called "The Minuteman" in which he claims that if the US military didn't guard foreign oil, the US wouldn't need foreign oil. But we're just England's henchman, after all...
http://www.debka.com/headline.php?hid=6366
It will only make sense to somebody with actual knowledge of the oil-gold-dollar relationship. Unfortunately, it appears that Static Chaos does not fall into that camp.
Hint: The dollar is an oil-backed currency.
FOFOA had a good discussion of this within the last few months.
The report can perhaps be rationalized in the context of an attempt to spur commodity induced inflation.
This article was put out there to spike the price of oil so some big long could try to get out of their position. Classic move, disinformation that can not be verified.
If this is disinfo, why has the IAEA steadibly been decreasing its forecasts for future oil production?
Just a few years ago they were saying 120mb/day by 2030 and with the 2009 report that's now down to just over 100
I think we've already peaked around 85mb/day...
If the IEA wants the price to go up by their forecast for future decrease in production, then why under report the inventory.
I meant to say why over report the inventory.
Yep!!
and if I remember correctly several large mobs were leasing sea-tankers, tanks & holes in the ground to store oil after the price collapsed speculating on $100pb oil by the end of 09.
regards.
Will Obama invade Venezuela?
If the world believes oil is scarcer than currently believed, prices will rise, exporters will be more reluctant to export, and people like Chavez will become even more belligerent.
The US economy requires affordable oil to function. An oil price shock will kick us into a severe depression.
Since oil has been priced in dollars and dollars have functioned as the world reserve currency, the US has enjoyed major benefits in its ability to consume oil, domestic or imported, with a feedback loop to our dependence on it.
No, the exporters of oil would want everyone to think it is scarce, unless they have their own geopolitical reasons (like the US propping them up in exchange for cooperation on their oil policy) to avoid doing so. It makes perfect sense to think that the US would want everyone to think oil is more abundant than it is.
> The US economy requires affordable oil to function. An oil price shock will kick us into a severe depression.
You mean we're not in one already?!
It all depends on your definition. You could call our current state a severe recession, mild depression, or (my favorite) opening stages of a long-term downward adjustment.
“And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources"
Put a different way: Americans fear the end of the supremacy of oil because it would render their hegemony in the oil regions of the world irrelevant.